On September $1,20$X$1,$ Bauer Inc. has $10,000$ ounces of silver, with an average cost of $$12$ per ounce, in inventory. The spot price for silver is $$16$ per ounce. Bauer decides to retain the inventory until the beginning of January $20$X$2,$ hoping that the price increases to $$17$ per ounce. To hedge its position, Bauer sells future contracts to sell $100,000$ ounces of silver at $$17$ per ounce on January $2,20$X$2.$ The market spot rates and future prices for silver are as follows:

Spot Price January $20$X$2$ Future Price

September $1,20$X$1$ $ $16$ $ $17$

December $31,20$X$1$ $ $14\mathrm{.}50$ $ $15\mathrm{.}50$

January $2,20$X$2$ $ $16\mathrm{.}80$ $ $16\mathrm{.}80$

What entry does Bauer prepare on September $1,20$X$1?$

Multiple Choice

Derivative Future Contract $160,000$

Inventory $160,000$

Derivative Future Contract $15,000$

Gain on hedge activity $15,000$

Derivative Future Contract $15,000$

Cash $15,000$

No entry is needed.