(Solved by Humans)-Zelm Company is a U.S. company that produces electronic switches for the telecommunications

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Zelm Company is a U.S. company that produces electronic switches for the telecommunications industry. Zelm regularly imports component parts from a sup- plier located in Guadalajara, Mexico, and makes payments in Mexican pesos. The following spot exchange rates, forward exchange rates, and call option premium for Mexican pesos exist during the period August to October. U.S. Dollar per Mexican Peso Forwa r d Rate Call Option P r emium for October 31 Date Spot Rate to October 31 (strike price $0.080) August 1 $0.080 $0.085 $0.0052 September 30 0.086 0.088 0.0095 October 31 0.091 0.091 0.0110 P art A On August 1, Zelm imports parts from its Mexican supplier at a price of 1 million Mexican pesos. It receives the parts on August 1 but does not pay for them until October 31. In addition, on August 1, Zelm enters into a forward contract to purchase 1 million pesos on October 31. It appropriately designates the forward contract as a cash fl o w hed g e of the Mexican peso liability exposure. Zelm’s incremental borrowing rate is 12 percent per annum (1 percent per month), and the company uses a straight-line method on a monthly basis for allocating forward discounts and premiums. P art B The facts are the same as in Part A with the exception that Zelm designates the forward contract as a f air v alue hed g e of the Mexican peso liability exposure. P art C On August 1, Zelm imports parts from its Mexican supplier at a price of 1 million Mexican pesos. It receives the parts on August 1 but does not pay for them until October 31. In addition, on August 1, Zelm purchases a three-month call option on 1 million Mexican pesos with a strike price of $0.080. The option is appropriately designated as a cash fl o w hed g e of the Mexican peso liability exposure. P art D On August 1, Zelm orders parts from its Mexican supplier at a price of 1 million Mexican pesos. It receives the parts and pays for them on October 31. On August 1, Zelm enters into a forward contract to purchase 1 million Mexican pesos on October 31. It designates the forward contract as a f air v alue hed g e of the Mexican peso firm commitment. Zelm determines the fair value of the firm commitment by referring to changes in the forward exchange rate. P art E On August 1, Zelm orders parts from its Mexican supplier at a price of 1 million Mexican pesos. It receives the parts and pays for them on October 31. On August 1, Zelm purchases a three-month call option on 1 million Mexican pesos with a strike price of $0.080. The option is appropriately designated as a f air v alue hed g e of the Mexican peso firm commitment. The fair value of the firm commitment is by reference to changes in the spot exchange rate. P art F Zelm anticipates that it will import component parts from its Mexican supplier in the near future. On August 1, Zelm purchases a three-month call option on 1 million Mexican pesos with a strike price of $0.080. It appropriately designates the option as a cash fl o w hed g e of a forecasted Mexican peso transaction. Zelm receives and pays for parts costing 1 million Mexican pesos on October 31. Requi r ed Prepare journal entries for each of these independent situations in accordance with U.S. GAAP and determine the impact each situation has on the September 30 and October 31 trial balances.