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Problem 13-5 (IAA) Taal Company requires 25,000 pounds of copper each month in its operations. To eliminate the price risk associated with copper purchases, on December 1, 2020, the entity entered into a futures contract as a cash flow hedge to buy 25,000 pounds of copper on June 1, 2021. The futures price is P50 per pound. The futures contract is managed through an exchange. As with most derivative contracts, this futures contract is settled by an exchange of cash on June 1, 2021 based on the price of copper on that date. The market price per pound is P45 on December 31, 2020 and P42 on June 1, 2021. Required: Prepare journal entries for 2020 and 2021. Problem 13-6 (IAA) Legaspi Company produces colorful 100% cotton T-shirts that are very popular among the youth. The entity uses 150,000 kilos of cotton each month in the production process. On December 1, 2020, the entity purchased a call option to buy 150,000 kilos of cotton on July 1, 2021. The call option price is P30 per kilo. The entity paid P50,000 for the call option which was designated as a cash flow hedge. Required: Prepare journal entries for 2020 and 2021 assuming: 1. The market price of cotton on December 31, 2020 is P32 and the market price on July 1, 2021 is P35 per kilo. 2. The market price of cotton on December 31, 2020 is P32 and the market price on July 1, 2021 is P28 per kilo