Difference between the then-current market price

Reference no: EM133633201

Read and complete the case from Chapter 8 in your text. Then upload a Word document (1-2 pages) to this assignment.

8.4 Fuel Purchase Agreement

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?

Reference no: EM133633201

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