Please help me to solve this problem A U.S. company anticipates that it will sell merchandise for €100,000 at the end of August and receive payment for it at the end of October. On May1, when the spot rate is $1.20 and the forward rate for delivery on October 31 is $1.21, the company enters a forward contract to sell €100,000 onOctober 31. The forward contract qualifies as a cash flow hedge of the forecasted sale. The company sells the merchandise on August 30, when thespot rate is $1.232 and the forward rate for October 31 delivery is $1.23 and receives payment of €100,000 and closes the forward contract onOctober 31, when the spot rate is $1.24. The company has a December 31 year-end.Sales revenue is reported on the company's income statement in the amount of:Sales revenue is reported on the company's income statement in the amount of:Select one:O A. $125,200O B. $121,200O C. $123,000D. $123,200A U.S. company anticipates that it will purchase merchandise for €100,000 at the end of August and pay for it at the time the merchandise isdelivered. On May 1, when the spot rate is $1.20 and the forward rate for delivery on August 30 is $1.21, the company enters a forward contract tobuy €100,000 on August 30. The forward contract qualifies as a cash flow hedge of the forecasted purchase. The company purchases themerchandise on August 30, when the spot rate is $1.232, and closes the forward contract and pays the supplier €100,000. The company sells themerchandise in October. The company has a December 31 year-end.On August 30, the company records the merchandise at what amount?Select one:A. $123,200B. $125,400C. $120,000D. $121,000

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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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