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fuel was selling for $4.85 per gallon. Required: What entries should True Jet record as of. 1- contract inception? 2 - then at 12/31/x4? 3 - then at 12/31x5?

fuel was selling for $4.85 per gallon. Required: What entries should True Jet record as of. 1- contract inception? 2 - then at 12/31/x4? 3 - then at 12/31x5?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On 1/1/x4, TrueJet Airlines and Supplier Co. signed a purchase agreement whereby TrueJet agreed to purchase 20,000 gallons of jet fuel from Supplier Co. for $4.90 per gallon on 12/31/x6. The contract stipulates that, at settlement on 12/31/x6, TrueJet can choose to accept settlement in cash of the difference between the then-current market price and the contract price for the jet fuel, or TrueJet can accept physical delivery of the jet fuel. At the time the contract was signed, jet fuel was selling for $4.10 per gallon. On 12/31/x4, jet fuel was selling for $5.05 per gallon. As of 12/31/x5, jet fuel was selling for $4.85 per gallon. Required: What entries should TrueJet record as of: 1 - contract inception? 2- then at 12/31/x4? 3 - then at 12/31x5?
Transcribed Image Text:On 1/1/x4, TrueJet Airlines and Supplier Co. signed a purchase agreement whereby TrueJet agreed to purchase 20,000 gallons of jet fuel from Supplier Co. for $4.90 per gallon on 12/31/x6. The contract stipulates that, at settlement on 12/31/x6, TrueJet can choose to accept settlement in cash of the difference between the then-current market price and the contract price for the jet fuel, or TrueJet can accept physical delivery of the jet fuel. At the time the contract was signed, jet fuel was selling for $4.10 per gallon. On 12/31/x4, jet fuel was selling for $5.05 per gallon. As of 12/31/x5, jet fuel was selling for $4.85 per gallon. Required: What entries should TrueJet record as of: 1 - contract inception? 2- then at 12/31/x4? 3 - then at 12/31x5?
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