please answer the questionsE A$-7$ Derivatives; fair value hedge; futures contract; firm commitment LOA$-2$

Arlington Steel Company is a producer of raw steel and steel$-$related products.

On January $3,2025,$ Arlington enters into a firm commitment to purchase $10,000$ tons of iron ore pellets from a supplier to satisfy

spring production demands. The purchase is to be at a fixed price of $$63$ per ton on April $30,2025.$

To protect against the risk of changes in the fair value of the commitment contract, Arlington enters into a futures contract to sell

$10,000$ tons of iron ore on April $30$ for $$\frac{63}{?}$ ton $($the current price$).$

The contract calls for net cash settlement, and the company must report changes in the fair values of its hedging instruments each

quarter. On March $31,$ the price of iron ore fell to $$61/$ton$,$ and then to $$60/$ton on April $30.$

Required:

Calculate the net cash settlement at April $30,2025.$

Prepare the journal entries for the period January $3$ to April $30,2025,$ to record the firm commitment, necessary adjustments for

changes in fair value, and settlement of the futures contract.