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Coronado Co. uses titanium in the production of its specialty drivers. Coronado anticipates that it will need to purchase 300 ounces of titanium in November 2017, for clubs that will be sold in advance of the spring and summer of 2018. However, if the price of titanium increases, this will increase the cost to produce the clubs, which will result in lower profit margins. To hedge the risk of increased titanium prices, on May 1, 2017, Coronado enters into a titanium futures contract and designates this futures contract as a cash flow hedge of the anticipated titanium purchase. The notional amount of the contract is 300 ounces, and the terms of the contract give Coronado the option to purchase titanium at a price of $750 per ounce. The price will be good until the contract expires on November 30, 2017. Assume the following data with respect to the price of the call options and the titanium inventory purchase.

Date		Spot Price for November Delivery
May 1, 2017		$750 per ounce
June 30, 2017		780 per ounce
September 30, 2017		788 per ounce

Present the journal entries for the following dates/transactions.

(a)		May 1, 2017Inception of futures contract, no premium paid.
(b)		June 30, 2017Coronado prepares financial statements.
(c)		September 30, 2017Coronado prepares financial statements.
(d)		October 5, 2017Coronado purchases 300 ounces of titanium at $788 per ounce and settles the futures contract.
		(e) December 15, 2017Coronado sells clubs containing titanium purchased in October 2017 for $236,000. The cost of the finished goods inventory is $140,000. (f) Indicate the amount(s) reported in the income statement related to the futures contract and the inventory transactions on December 31, 2017.

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