Question 3: Cash Flow Hedges On 4 Januaryx1firmCis expecting (with a very high probability) to purchase Alpine spruce from a European supplier. The Alpine spruce is to be used in the production of flattop acoustic guitars, and the spruce is to be delivered (and paid for) on 31 Marchx2(price=180000€). The functional currency of firm Cis US\$. The purchase contract will be in€. Currency exchange rate is1.8€/US$. In order to safeguard itself against currency exchange risks, firmCbuys a forward contract over180000€(long) at an exchange rate of1.8USD/€ The fair value of this forward contract at 4 Januaryx1is nil. Assume that the exchange rate is2.0€/US$on 31 Decemberx1and1.5€/US$on 31 Marchx2. Exclude the interest component in the forward (forward points). Provide the journal entries per 4 Januaryx1,31 Decemberx1, and 31 Marchx2, assuming that firmCa) does not apply cash flow hedge accounting, b) does apply cash flow hedge accounting, assuming that the hedge is fully effective.