on march 17 kennedy baking inc committed to buy 1000 tons of commodity a for delivery in may at a cost of 118 per ton

Required
1. Prepare all applicable entries for the months of March through June regarding the inventory and the hedging instrument assuming qualification as a fair value hedge. Record the changes in the intrinsic value and time value of the option with separate entries.
2. For the entire 1,000 tons of processed commodity A, prepare a schedule regarding the cost of the processed commodity available for sale in terms of the desired cost, the cost without the hedge, and the cost with the hedge.