The Cinco Centavo Company (CCC), a U.S. company, made credit sales to four customers in Asia on September 15, 2018, and received payment on October 15, 2018. Information related to these sales is as follows

CCC’s fiscal year ends September 30.

Required

1. Use historical exchange rate information available on the Internet at www.x-rates.com, Historical Lookup, to find exchange rates between the U.S. dollar and each foreign currency for September 15, September 30, and October 15, 2018

2. Determine the foreign exchange gains and losses that CCC would have recognized in net income in the fiscal years ended September 30, 2018, and September 30, 2019, and the overall foreign exchange gain or loss for each transaction. Determine for which transaction, if any, it would have been important for CCC to hedge its foreign exchange risk.

3. CCC could have acquired a one-month put option on September 15, 2018, to hedge the foreign exchange risk associated with each of the four export sales. In each case, the put option would have cost $100 with the strike price equal to the September 15, 2018, spot rate. Determine for which hedges, if any, CCC would have realized a net cash flow benefit from the foreign currency option.

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Customer Location Invoice Price Surat Ltd. Cebu Group Hayagawa Company Senai Berhad Mumbai, India Cebu City, Philippines Osaka, Japan Johor Bahru, Malaysia 7,195,000 Indian rupees (INR) 5,417,000 Philippine pesos (PHP) 11,210,000 Japanese yen (JPY) 414,000 Malaysian ringgits (MYR)