Question
Forward Rate for 4/15/23 Spot Rate Delivery of Canadian Dollars November 15, 2022 $0.705 $0.695 December 31, 2022 0.765 0.75 March 01, 2023 0.72 0.715
| Forward Rate for 4/15/23 | ||
|---|---|---|
| Spot Rate | Delivery of Canadian Dollars | |
| November 15, 2022 | $0.705 | $0.695 |
| December 31, 2022 | 0.765 | 0.75 |
| March 01, 2023 | 0.72 | 0.715 |
| April 15, 2023 | 0.74 | 0.74 |
On November 15, 2022, a U.S. company receives an order from a Canadian customer for merchandise priced at C$ 1,000,000 On the same date, the company enters a forward contract locking in the U.S. dollar amount to be received from the customer, for delivery on April 15, 2023. The forward qualifies as a hedge of the firm commitment. The company delivers the merchandise on March 1, 2023, and on April 15, 2023, payment of C$ 1,000,000 is received from the customer and the forward contract is closed.
13.
At what amount is sales revenue reported on March 1, 2023?
a. $705,000
b. $700,000
c. $695,000
14.
What is the net exchange gain or loss for 2022 and 2023?
a.
| 2022 | 2023 | |
|---|---|---|
| $20,000 gain | $25,000 loss |
b.
| 2022 | 2023 | |
|---|---|---|
| $0 gain | $5,000 loss |
c.
| 2022 | 2023 | |
|---|---|---|
| $55,000 loss | $15,000 gain |
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Cornerstones of Financial and Managerial Accounting
Authors: Rich Jones, Mowen, Hansen, Heitger
1st Edition
9780538751292, 324787359, 538751290, 978-0324787351
