Jefferson Company Entered into a Forward Contract with Washington Company

question 33

Essay

Jefferson Company entered into a forward contract with Washington Company on October 1,2011,under which Jefferson agreed to buy (and Washington agreed to sell)10,000 tons of coal at $80.00 per ton in 90 days.On October 1,2011,the price of coal is $82.00 per ton.On December 29,2011,the price of coal is $85.00 per ton.The contract allows for net settlement.
Required:
Determine the net settlement on the forward contract.

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