Pattay Corporation purchases 200,000 pounds of copper on September 1, 2016, at $2 per pound. In order to hedge the value of the copper, on October 1, 2016, Pattay enters into a forward contract to sell the 200,000 pounds on January 31, 2017, at $2.3 per pound. The contract is settled net. Assume an appropriate interest rate of 8 percent. Sales price at each of the corresponding dates is given below:

                                             Copper price

October 1, 2016                           $1.8

December 31, 2016                     $2.8

January 31, 2017                          $2.5

REQUIRED: 

Prepare the journal entries to record the transactions at each of the corresponding dates.