QUESTION 2- Reeda Craft Sdn Bhd (Reeda Craft) uses silver to manufacture its hand-craft products. Its main concern is the rising of silver price which would reduce its profit margin. Therefore, it regularly enters into future contract to hedge the risk. On 1 January 2017, Reeda Craft entered into a silver future contract to purchase 5,000 grams of silver for RM120 per gram. The future contract is designated as a cash flow hedge of the anticipated silver purchase. The future contract expired on 1 May 2017. The price for silver is as follows: Date 1 January 2017 31 March 2017 1 May 20172 Spot Price for delivery on 1 May 2017 RM120 per gram RM125 per gram RM123 per gram On 1 May 2017, Reeda Craft purchased 5,000 grams of silver for RM123 per gram and made settlement on the futures contract. Reeda Craft financial year ends is on 31 March. REQUIRED: (a) Prepare the journal entries to record the above transactions. If no entry is needed, write "No Entry Necessary. 4 (b) Reeda Craft processes the silver into craft items and the total cost of the craft items including the silver inventory purchased in May 2017 is RM800,000. Reeda Craft manages to sell all its silver craft item in July 2017 for RM1,000,000. Assuming that Reeda Craft is adopting a perpetual inventory system, prepare the relevant journal entries to record transaction on July 2017