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Please include the FASB Codification you use for this Fueling Up On 1/1/X1, Airline Inc. signed a purchase agreement to purchase 10,000 gallons of jet
Please include the FASB Codification you use for this
Fueling Up On 1/1/X1, Airline Inc. signed a purchase agreement to purchase 10,000 gallons of jet fuel from Seller Co. for $5.20 per gallon on 1/1/X3. The contract stipulates that, at settlement on 12/31/X3, Airline Inc. can choose to either accept physical delivery of the jet fuel or can accept settlement in cash of the difference between the thencurrent market price and the contract price for the jet fuel. At the time the contract was signed, jet fuel was selling for $5.15 per gallon. On 12/31/X1, jet fuel was selling for $5.25 per gallon. As of 12/31/X2, jet fuel was selling for $5.30 per gallon. What entries should Airline Inc. record as of 1) contract inception, 2) then at 12/31/X1,3 ) then at 12/31/X2 ? Draft a memo analyzing the above issue using the Codification and any nonauthoritative guidance (only if required). Please ensure you include Journal Entries in your response. Correction: In the second line, the settlement price of $5.20 per gallon is "on 12/31/X3 " (not 1/1/X3 ). Fueling Up On 1/1/X1, Airline Inc. signed a purchase agreement to purchase 10,000 gallons of jet fuel from Seller Co. for $5.20 per gallon on 1/1/X3. The contract stipulates that, at settlement on 12/31/X3, Airline Inc. can choose to either accept physical delivery of the jet fuel or can accept settlement in cash of the difference between the thencurrent market price and the contract price for the jet fuel. At the time the contract was signed, jet fuel was selling for $5.15 per gallon. On 12/31/X1, jet fuel was selling for $5.25 per gallon. As of 12/31/X2, jet fuel was selling for $5.30 per gallon. What entries should Airline Inc. record as of 1) contract inception, 2) then at 12/31/X1,3 ) then at 12/31/X2 ? Draft a memo analyzing the above issue using the Codification and any nonauthoritative guidance (only if required). Please ensure you include Journal Entries in your response. Correction: In the second line, the settlement price of $5.20 per gallon is "on 12/31/X3 " (not 1/1/X3 )Step by Step Solution
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