Accounting for forward commodity contract. Refer to the information for Firm \(D\) in Examples 13 and 17 in the chapter. Firm D holds 10,000 gallons of aging whiskey in inventory on October 31, Year 1, that cost \(\$ 225\) per gallon. Firm D expects to complete aging of the whiskey on March 31, Year 2. On October 31, Year 1, it purchases a forward contract for 10,000 gallons of whiskey for delivery on March 31, Year 2 at a price of \(\$ 320\) per gallon. The forward price for whiskey on December 31, Year 1, for delivery on March 31, Year 2, is \(\$ 310\) per gallon. The spot price for whiskey on March 31 , Year 2, is \(\$ 270\) per gallon. Firm D sells the whiskey on this date for \(\$ 270\) per gallon. To simplify this problem, ignore the effects of the time value of cash.

a. Assume for this part that Firm D classifies the forward contract as a fair value hedge of the value of the inventory. Give the journal entries for Firm D on October 31, Year 1, December 31, Year 1, and March 31, Year 2.

b. Assume for this part that Firm D classifies the forward contract as a cash flow hedge. Give the journal entries for Firm D on October 31, Year 1, December 31, Year 1, and March 31, Year 2.