C. (25 pts.) Wernell Co. purchased 2,200 barrels of fuel oil for $140,800 ($64 per barrel) on November 22, 2004. Wernell Co. is planning to sell the oil in the heating season in the winter of 2005. Wernell accounts for its inventory at the lower-of-FIFO-cost-or-net realizable value. To hedge against potential declines in the value of the inventory, Wernell purchased a put option for a premium of $280. The put gives Wernell the option to sell 2,200 barrels of oil at an exercise price of $64 per barrel. The option expires on March 1, 2005. The following data are available with respect to the values of the fuel oil, and put option. Date Market Price Time Value of Fuel Oil of Put Option November 30, 2004 62 per barrel $228 December 31, 2004 58 per barrel $122 Required: Prepare journal entries for the following dates. 1. November 22, 2004. a. Purchase of the fuel oil. b. Purchase of put option. 2. November 30, 2004. a. Adjust oil to fair value. b. Adjust time value of put option to fair value. c. Adjust intrinsic value of put option to fair value. 3. December 31, 2004. a. Adjust oil to fair value. b. Adjust time value of put option to fair value. c. Adjust intrinsic value of put option to fair value