Wil has 100,000 units of widgets in its inventory on October 1, 2011. Wil purchased them for $1 per unit one month ago. It hedges the value of the widgets by entering into a forward contract to sell 100,000 widgets on January 31, 2012, for $2 each. The contract is to be settled net. Assume that a discount rate of 6 percent is reasonable.

Prepare the journal entries to properly account for this hedge of an existing asset on the following dates:

1. October 1, 2011, when the widget price is $1.50

2. December 31, 2011, when the widget price is $2.50

3. January 31, 2012, when the widget price is $2.30