Question $1$

Ivan has $14,000$ barrels of oil that were purchased a month ago at $$50\mathrm{.}00$ per barrel. On November $1,2014,$ Ivan hedged the value of the inventory by entering into a forward contract to sell $14,000$ barrels of oil on January $31,2015,$ for $$60\mathrm{.}00$ per barrel. The forward contract is to be settled net. Assume this is a fair$-$value hedge.

Required:

Assume a $6\%$ discount rate is reasonable, and using a mixed$-$attribute model, prepare the journal entries to account for this hedge at the following dates:

When the market price is$...$

November $1,2014$ $$60\mathrm{.}00$ per barrel

December $31,2014$ $$65\mathrm{.}00$ per barrel

January $31,2015$ $$62\mathrm{.}00$ per barrel