AUS. 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 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 €100,000 on October 31. The forward contract qualifies as a cash flow hedge of the forecasted sale, the company sells the merchandise on August 30, when the spot rate is $1.132 and the forward rate for October 31 delivery is $1.13€ and receives payment of E100,000 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 Select one a $113,000 b. $115,200 c $111.200 $113,200
AUS. 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 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 €100,000 on October 31. The forward contract qualifies as a cash flow hedge of the forecasted sale, the company sells the merchandise on August 30, when the spot rate is $1.132 and the forward rate for October 31 delivery is $1.13€ and receives payment of E100,000 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 Select one a $113,000 b. $115,200 c $111.200 $113,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kk.233.
Transcribed Image Text:AUS. 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 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 €100,000 on October 31. The forward contract qualifies as a cash flow hedge of the forecasted sale. The
company sells the merchandise on August 30, when the spot rate is $1.132 and the forward rate for October 31 delivery is $1.13€ and receives payment of €100.000 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
Select one:
a. $113,000
b. $115,200
c. $111.200
$113,200
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