On October $15,2025,$ Oil Products Co$.$ purchased $4,400$ barrels offuel oil with a cost of $$264,000($$$60$ per barrel$).$ Oil Products is holding this inventory in anticipation of the winter $2026$ heating season. Oil Products accounts for its inventory at the lower$-$of$-$FIFO$-$cost$-$or$-$net realizable value. To hedge against potential declines in the value of the inventory, Oil Products also purchased a put option on the fuel oil. Oil Products paid an option premium of $$290$ for the put option, which gives Oil Products the option to sell $4,400$ barrels of fuel oil at a strike price of $$60$ per gallon. The option expires on March $1,2026.$ The following data are available with respect to the values of the fuel of inventory and the put option.

Date

Market Price of Fuel Oil

Time Value of Put Option

October $31,2025$

$$58$ per gallon

$$166$

November $30,2025$

$57$ per gallon

$106$

December $31,2025$

$54$ per gallon

$38$

Instructions

Prepare the journal entries of Oil Products for the following dates.

October $15,2025$Oil Products purchases fuel oil and the put option on fuel oil.

October $31,2025$Oil Products prepares financial statements.

November $30,2025$Oil Products prepares financial statements.

December $31,2025$Oil Products prepares financial statements.

Indicate the amount$($s$)$ reported on the balance sheet and income statement related to the fuel oil inventory and the put option on November $30,2025.$

Indicate the amount$($s$)$ reported on the balance sheet and income statement related to the fuel oil and the put option on December $31,2025.(1)$

$($To record investment in stock.$)$

L

$($To record purchase of put option.$)$

$(2)$

$(3)$

Unrealized Holding Galn or Loss $-$ Income

$($To adjust the value of inventory.$)$

$($To adjust the value of inventory.$)$

$1$

$8800$

$($To record the time value change.$)$

Unrealized Holding Galn or Loss $-$ Income

$($To adjust the value of inventory.$)$

L

$($To record the change in intrinsic value.$)$

Cost of Goods Sold

L

$($To record the time value change.$)$

$]$ F

Unrealized Holding Galn or Loss $-$ Income

$($To adjust the value of inventory.$)$