On October 1, 2018, Eagle Company forecasts the purchase of inventory from a British supplier on February 1, 2019, at a price of 100,000 British pounds. On October 1, 2018, Eagle pays $1,800 for a three-month call option on 100,000 pounds with a strike price of $2.00 per pound. The option is considered to be a cash flow hedge of a forecasted foreign currency transaction. On December 31, 2018, the option has a fair value of $1,600. The following spot exchange rates apply: Date Spot Rate October 1, 2018 $2.00 December 31, 2018 $1.97 February 1, 2019 $2.01
(a) What journal entry should Eagle prepare on October 1, 2018?