.... On July 1, 2017 a cotton wholesaler has 3 million pounds of cotton inventory on hand at an average cost of $1.15 per pound. To protect the inventory from a possible decline in cotton prices, the company sells cotton futures contracts for 3 million pounds at $1.30 a pound for delivery on October 31, 2017 to coincide with its expected physical sale of its cotton inventory. The Company designates the hedge as a fair value hedge (i.e., The Company is hedging changes in the inventorys fair value, not changes in cash flows from anticipated sales.).

Following are futures and spot prices for the relevant dates:

Date	Spot	Futures
July 1, 2017	$1.28	$1.30
September 30, 2017	$1.26	$1.28
October 31, 2017	$1.29	n/a

Prepare the journal entries to record the following:

1. Sale of futures contract
2. Adjusting entry at September 30
3. Sale of cotton on October 31 at spot price
4. How much cash does the company receive in total on this transaction?