On October 1 20x1, Rombaurer has 10 million pounds of copper Inventory on hand at an average cost of $0.65 a pound. The spot price for copper is $0.90 a pound. Instead of selling copper now, Rombaurer decides to hold the inventory until February 20x2 when management believes the price will return to a normal level of $0.95 a pound. To hedge its position, Rombaurer sells futures contracts at $0 95 for February delivery, Spot and futures prices over the next several months are as follows: NYMEX Copper Prices February 20x2 Futures Spot Price Price October 1, 20X1 50.90 $0.95 December 31, 20x1 0.91 February 26, 20X2 0.94 0.94 0.86 On February 26, 20X2, Rombourer sells its copper on the spot market for $0.94 a pound and cancels the futures contracts. Required: 1. Suppose that Rombaurer sells futures contracts for only 5 million pounds of copper (Management had decided that it is prudent to hedge only half of the company's economic exposure.) Because the futures contracts are now "ineffective in hedging the company's entire fair value exposure to copper price fluctuations, Rombaurer cannot use hedge accounting, Prepare all journal entries needed to account for the futures contracts and sale of copper from October 1, 20x1, through February 26, 20X2 2. Now assume that Rombaurer designates these futures contracts as a fully effective hedge of its risk exposure for 5 million pounds of copper inventory (The remaining 5 million pounds of inventory is not being hedged.) Rombaurer can now use hedge accounting for the futures contracts. Prepare alt journal entries needed to account for the futures contracts and sale of copper from October 1, 20X1, through February 26, 20X2. for the futures contracts. Prepare all journal entries needed to account for the futures contracts and sale of copper from October 1 20x1, through February 26, 20x2. Answer is not complete. Complete this question by entering your answers in the tabs below. Required Required 2 Suppose that Rombaurer sells futures contracts for only 5 million pounds of copper. (Management had decided that it is prudent to hedge only half of the company's economic exposure.) Because the futures contracts are now "ineffective" in hedging the company's entire fair value exposure to copper price fluctuations, Rombaurer cannot use hedge accounting Prepare all journal entries needed to account for the futures contracts and sale of copper from October 1, 20x1, through February 26, 20X2. (Ir no entry is required for a transaction/event, select "No journal entry required" in the first account Meld. Enter your answers in dollars and not in millions of dollars.) Show less No General Journal Debit Credit Date October 1, 20X1 1 140,000 140,000 20x1, through February 26, 20x2. Answer is not complete. Complete this question by entering your answers in the tabs below. Required Required 2 Now assume that Rombaurer designates these futures contracts as a "fully effective hedge of its risk exposure for 5 million pounds of copper inventory. (The remaining 5 million pounds of inventory is not being hedged.) Rombaurer can now use hedge accounting for the futures contracts. Prepare all journal entries needed to account for the futures contracts and sale of copper from October 1, 20x1, through February 26, 20X2. (If no entry is required for a transaction/event, select "No journal entry required in the first account field, Enter your answers in dollars and not in millions of dollars.) Show less No Date General Journal Debit Credit