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Tamarisk Jewelry Co. uses gold in the manufacture of its products. Tamarisk anticipates that it will need to purchase 500 ounces of gold in October 2020, for jewelry that will be shipped for the holiday shopping season. However, if the price of gold increases, Tamarisks cost to produce its jewelry will increase, which would reduce its profit margins. To hedge the risk of increased gold prices, on April 1, 2020, Tamarisk enters into a gold futures contract and designates this futures contract as a cash flow hedge of the anticipated gold purchase. The notional amount of the contract is 500 ounces, and the terms of the contract give Tamarisk the right and the obligation to purchase gold at a price of $ 270 per ounce. The price will be good until the contract expires on October 31, 2020. Assume the following data with respect to the price of the futures contract and the gold inventory purchase:

Date		Spot Price for October Delivery
April 1, 2020		$ 270 per ounce
June 30, 2020		279 per ounce
September 30, 2020		283 per ounce

Part 1: Prepare the journal entries for the following transactions.

(a)		April 1, 2020Inception of the futures contract, no premium paid.
(b)		June 30, 2020 Tamarisk Co. prepares financial statements.
(c)		September 30, 2020 Tamarisk Co. prepares financial statements.
(d)		October 10, 2020 Tamarisk Co. purchases 500 ounces of gold at $ 283 per ounce and settles the futures contract.
(e)		December 20, 2020 Tamarisk sells jewelry containing gold purchased in October 2020 for $ 383,600. The cost of the finished goods inventory is $ 199,200.

Part 2: Indicate the amount(s) reported on the balance sheet and income statement related to the futures contract on June 30, 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

TAMARISK JEWELRY COMPANY Partial Balance Sheet:

Part 3: Indicate the amount(s) reported in the income statement related to the futures contract and the inventory transactions on December 31, 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

TAMARISK JEWELRY COMPANY Income Statement:

List of Accounts:

• Accumulated Other Comprehensive Loss
• Allowance for Doubtful Accounts
• Allowance to Reduce Inventory to Market
• Bad Debt Expense
• Bonds Payable
• Cash
• Call Option
• Common Stock
• Cost of Goods Sold
• Debt Investments
• Dividend Revenue
• Dividend Receivable
• Equity Investments
• Fair Value Adjustment
• Futures Contract
• Gain on Sale of Investments
• Gain on Settlement of Call Option
• Gain on Settlement of Put Option
• Interest Expense
• Interest Receivable
• Interest Revenue
• Inventory
• Investment Income
• Loss on Impairment
• Loss on Sale of Investments
• Loss on Settlement of Call Option
• Loss on Settlement of Put Option
• No Entry
• Notes Payable
• Paid-in Capital in Excess of Par - Common Stock
• Put Option
• Recovery of Loss from Impairment
• Retained Earnings
• Revenue from Investment
• Sales Revenue
• Swap Contract
• Unrealized Holding Gain or Loss - Equity
• Unrealized Holding Gain or Loss - Income

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