Use of futures contracts to hedge cotton inventory-fair value hedge On December 1, 2018, a cotton wholesaler purchases 10 million pounds of cotton inventory at an average cost of 37 cents per pound. To protect the inventory from a possible decline in cotton prices, the company sells cotton futures contracts for 10 million pounds at 67 cents a pound for delivery on June 1, 2019, to coincide with its expected physical sale of its cotton inventory. The company designates the hedge as a fair value hedge (ie., the company is hedging changes In the inventory's fair value, not changes in cash flows from anticipated sales). The cotton spot price on December 1 is 75 cents per pound. On December 31, 2018, the company's fiscal year-end, the June 1 cotton futures price has fallen to 57 cents a pound, and the spot price has fallen to 66 cents a pound. On June 1, 2019, the company closes out its futures contracts. Following are futures and spot prices for the relevant dates: Date Spot Futures December 1, 2018 $0.75 50.67 December 31, 2018 $0.66 $0.57 June 1, 2019 $0.48 n/a Required Prepare the journal entries to record the following: a. Purchase of cotton b. Sale of cotton futures contract c. Adjusting entry at December 31 d. Sale of cotton on June Note: If no entry is required, select "No entry required" for both the debit and credit account titles.