Chc 5 Mega Company believes the price of oil will increase in the coming months. Therefore, it decides to purchase call options on oil as a price-risk-hedging device to hedge the expected increase in prices on an anticipated purchase of oil. 20 points On November 30, 20X1, Mega purchases call options for 13,000 barrels of oil at $35 per barrel at a premium of $2 per barrel with a March 1, 20X2, call date. The following is the pricing information for the term of the call: Skipped Date November 30, 20X1 December 31, 20x1 March 1, 20X2 Spot Price $35 36 38 Futures Price (for March 1, 20X2, delivery) $36 37 eBook Print References The information for the change in the fair value of the options follows: Date November 30, 20X1 December 31, 20X1 March 1, 20x2 Time Value $ 26,000 6,000 Intrinsic Value $ 13,000 39,000 Total value $ 26,000 19,000 39,000 On March 1, 20X2, Mega sells the options at their value on that date and acquires 13,000 barrels of oil at the spot price. On June 1, 20X2, Mega sells the oil for $39 per barrel. Required: a. Prepare the journal entry required on November 30, 20X1, to record the purchase of the call options. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Record the decrease in the time value of the options to current earnings. Note: Enter debits before credits. Date General Journal Debit Credit Dec. 31, 20X1 Journal entry worksheet Record the decrease in the time value of the options to current earnings. The options have expired. Note: Enter debits before credits. Date General Journal Debit Credit Mar. 1, 20X2 > 1 Record the decrease in the time value of the options to current earnings. The options have expired. gs. The 2 Record the increase in the intrinsic value of the options to other comprehensive income. 3 Record the sale of the call options. 4 Credit Record the purchase of 13,000 barrels of oil at the spot price of $38 per barrel. d. Prepare the entries required on June 1, 20X2, to record the sale of the oil and any other entries required as a result of the option. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list X: 1 Record the sale of 13,000 barrels of oil at $39 per barrel. > 2 Record the entry to recognize the cost of the oil sold. 3 Record the entry to reclassify into earnings the other comprehensive income from the cash flow hedge. Credit