Cavalier Bicycles uses carbon fiber to produce its high performance road and mountain bikes. Cavalier anticipates it will need to purchase $45,000$ pounds of carbon fiber in July $2025$ to make enough bikes to meet its fourth quarter sales demand.

However, if the price of carbon fiber increases, the cost to produce the bikes will increase and in turn lower Cavalier's profit margins.

To hedge against the risk of rising carbon fiber prices, on June $12025,$ Cavalier enters into a forward contract with a third part to buy $45,000$ pounds of carbon fiber at the current spot price of $$10$ per pound. It designates the contract as a cash flow hedge of the anticipated carbon fiber purchase.

The price in the contract expires on July $31,2025$ and the contract will settle by an exchange of cash with the intermediary based on the spot price on the settlement date.

On June $30,$ the spot price increases to $10\mathrm{.}50.$

Record joumal entries on June $1,$ June $30,$ Jul $2$ and uly $31($Setlement of forvard

contract and related sale of inventory$)$ for the above transactions.