A U.S. company anticipates that it will sell merchandise for €1,000,000 at the end of August, and receive payment for it at the end of October. On May 1, when the spot rate is $1.10 and the forward rate for delivery on October 31 is $1.11, the company enters a forward contract to sell €1,000,000 on October 31. The forward contract qualifies as a cash flow hedge. The company actually sells the merchandise on August 30, when the spot rate is $1.11 and the forward rate for October 31 delivery is $1.13, and receives payment of 1,000,000 and closes the forward contract on October 31, when the spot rate is $1.14. The company has a December 31 year-end. Sales revenue is reported on the company's income statement in the amount of: $1,110,000 a. b. C. d. $1,090,000 $1,140,000 $1,130,000 O a. answer a O b. answer b Oc answer c O d. answer d

A U.S. company anticipates that it will sell merchandise for €1,000,000 at the end of August, and receive payment for it at the end of October. On May 1, when the spot rate is $1.10 and the forward rate for delivery on October 31 is $1.11, the company enters a forward contract to sell €1,000,000 on October 31. The forward contract qualifies as a cash flow hedge. The company actually sells the merchandise on August 30, when the spot rate is $1.11 and the forward rate for October 31 delivery is $1.13, and receives payment of 1,000,000 and closes the forward contract on October 31, when the spot rate is $1.14. The company has a December 31 year-end. Sales revenue is reported on the company's income statement in the amount of: $1,110,000 a. b. C. d. $1,090,000 $1,140,000 $1,130,000 O a. answer a O b. answer b Oc answer c O d. answer d

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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