On July $1,2020$ a cotton wholesaler has $1$ million pounds of cotton inventory on hand at an average cost of $$1\mathrm{.}28$ per pound. To protect the inventory from a possible decline in cotton prices, the company sells cotton futures contracts for $1$ million pounds at $$1\mathrm{.}43$ a pound for delivery on October $31,2020$ to coincide with its expected physical sale of its cotton inventory. The Company designates the hedge as a fair value hedge $($i$.$e$.,$ The Company is hedging changes in the inventory$$s fair value, not changes in cash flows from anticipated sales.$).$

Following are futures and spot prices for the relevant dates:

Date

Spot

Futures

July $1,2020$

$$1\mathrm{.}41$

$$1\mathrm{.}43$

September $30,2020$

$$1\mathrm{.}39$

$$1\mathrm{.}41$

October $31,2020$

$$1\mathrm{.}42$

n$/$a

Required:

Prepare the journal entries to record the following:

a$.$ Sale of futures contract

b$.$ Adjusting entry at September $30$

c$.$ Sale of cotton on October $31$ at spot price

d$.$ How much cash does the company receive in total on this transaction?