'P'I'L'l'? {Cash FIDW Hedge} LEW Jewelry Co- uses gold in the manufacture of its products. LE'I:I"|.|r antici- pates that it will need to purchase Elli} ounces of gold in Chctober EDIE, for jE'WElI'jT that will be shipped for the hJolidaj.r shopping season. However; if the price ofgold increases, LEW's cost to produce its jewelry will increase, Wl'liCl't 1would reduce its profit margins. To hedge the riskotiJ'uIeasedgoldprices,onAprilLl']2_ LEWenters intoagolcl tubuesmntractand designates ttris fthres contract as a cash flow hedge ol the anticipated gold purcl'rase. The notions] amount of the contract is 500 ounces, and the terms of the contract give LEW the right and the obligation to pur- chasegoid ata pceolmperotumflheprice willbegooduntil temntracterqzriresonctober-LEUIE. Assume tire ollowing data with respect to the prioe of the call options and the gold iI'I'U'E'HtDI'F purd'rase. [late SpotPricefu'Chtdaeratiuary M13012 moparornoo Juno, 21112 atpar'ornoo Soptarrbara,2m2 315mm trrsburtlons Prepare the journal entries for the following transactions. [at April 1, ElliInception of the bres contract, no premium paid. [bl lune 3|], EDI ELEW Co. prepares nancial statements. to] September 31], EDIELEW Co. prepares nancial statements. [{1} IDctober It}, EliLEW Co. pLu'chases 5CD ounces of gold at $315 per ounce and settles the fumes contract. [e] December ED, EDIELEW sells jewelry containing gold purchased iniober 1012 for $350,\". The oost of the Fmished goods imrentorjr is . [I] Indicate the amount[sj reported on the balance sheet and income statement related to the futures contract on June 3D, EDIE. {g} Indicate 're amoLmt[s]I reported in the income statement related to the futures contract and the in ventory transactions on December 31, 2011