Accounting for Cash Flow Hedge: Futures Contract In October 2020, Rye Company, a producer of a grain-based product, determined that it would need 10,000 bushels of grain near the end of February 2021. Rye Company expects the current price of $4 per bushel of grain to change and does not want to assume the risk of such market price changes. As a result, Rye Company enters into a futures contract with Chicago Clearing House Inc. (CCH) to hedge the risk of market price changes of grain. The cost of the fair value hedge (futures contract) is zero. The futures contract provides that Rye Company purchases the grain at the date needed at market price, but CCH must pay Rye Company any differences above $4/bushel while Rye Company pays to CCH any differences below $4/bushel. Assume that the market price of grain is $4.20/bushel on December 31, 2020, and that Rye Company settles the futures contract with CCH and purchases the 10,000 bushels on February 20, 2021, in the market for $4.30/bushel. Required Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Note: Record any multiple debits in alphabetical order and any multiple credits in alphabetical order. a. Prepare the journal entry required on November 1, 2020 (if any) related to the purchase of the futures contract. Date Nov. 1, 2020 Account Debit Credit 0 0 0 0 b. Prepare the journal entry required on December 31, 2020 (if any) for the futures contract. Date Dec. 31, 2020 Account Debit Credit 0 0 0 0