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1. Use the information on the U.S. dollar value of the New Zealand dollar to answer the following question(s). Forward Rate for Spot Rate June 30, 2020 Delivery March 28, 2020 50.725 $0.730 May 2, 2020 0.732 0.735 June 28, 2020 0.750 0.750 On March 28, 2020, a U.S. company issues a purchase order to buy merchandise for NZ$100,000. The company will pay the supplier on June 28, 2020, so on March 28, the company enters a forward contract to purchase NZ$100,000 on June 28. The company takes delivery of the merchandise on May 2, 2020. On June 28, 2020, the company acquires NZ$100,000 using the forward contract and pays the supplier. The company sells the merchandise later in the year. The company's accounting year ends December 31. When the merchandise is sold by the U.S. company, cost of goods sold is: C A $73,200 B. $75,000 C. $72,700 C D.$73,000 1. Use the information on the U.S. dollar value of the pound sterling to answer the following question(s) Forward Rate for Spot Rate August 16, 2020 Delivery May 16, 2020 $1.380 51.375 June 30, 2020 1.39 1.388 August 16, 2020 1.400 1.400 On May 16, 2020, a U.S. company takes delivery of $100,000 in merchandise from a U.K. supplier. The company will pay the supplier $100,000 on August 16. On May 16, the company also enters a forward contract to buy $100,000 on August 16, 2020. On August 16, the company purchases $100,000 using the forward contract, and pays the supplier. The company's accounting year ends June 30, and it sells the merchandise in September 2020. What is the net effect on fiscal 2021 income of exchange rate changes due to the purchase and the forward contract? A $2,200 net gainB. $200 net gain C. no effect D.$200 net loss 1. Use the following information on the U.S. dollar value of the euro. Spot Rate Forward Rate for April 30, 2021 Delivery October 30, 2020 $ 1.250 ;1.254 December 31, 2020 -258 1.256 April 30, 2021 1.260 1.260 On October 30, 2020, a U.S. company forecasts that it will purchase merchandise from an Italian supplier at the end of April 2021, in the amount of E100,000, and will pay the supplier on delivery. On October 30, the company enters a forward contract to buy $100,000 on April 30, 2021 and classifies it as a cash flow hedge of the forecasted purchase. On April 30, 2021, the company receives the merchandise, closes the forward contract and pays the supplier. The company's accounting year ends December 31. On December 31, 2020, how is the change in value of the forward contract reported? A $600 loss, reported in income 5. $600 loss, reported in other comprehensive income C. $200 gain, reported in other comprehensive income D.$200 gain, reported in income 1. Use the information on the U.S. dollar value of the New Zealand dollar to answer the following question(s). Spot Rate Forward Rate for June 30, 2020 Delivery March 28, 2020 50.725 50.730 May 2, 2020 0.732 0.735 June 28, 2020 0.750 0.750 On March 28, 2020, a U.S. company issues a purchase order to buy merchandise forNZ$100,000. The company will pay the supplier on June 28, 2020, so on March 28, the company enters a forward contract to purchase NZ$100,000 on June 28. The company takes delivery of the merchandise on May 2, 2020. On June 28, 2020, the company acquires NZ$100,000 using the forward contract and pays the supplier. The company sells the merchandise later in the year. The company's accounting year ends December 31. When the company takes delivery of the merchandise on May 2, 2020, accounts payable is credited in the amount of: O A $73,000 B. $73,200 C. $75,000 D.$72,500 1. Use the information on the U.S. dollar value of the pound sterling to answer the following question(s). Spot Rate Forward Rate for August 16, 2020 Delivery May 16, 2020 $1.380 $1.375 June 30, 2020 .390 1.388 August 16, 2020 1.400 1.400 2. On May 16, 2020, a U.S. company takes delivery of $100,000 in merchandise from a U.K. supplier. The company will pay the supplier $100,000 on August 16. On May 16, the company also enters a forward contract to buy $100,000 on August 16, 2020. On August 16, the company purchases $100,000 using the forward contract, and pays the supplier. The company's accounting year ends June 30, and it sells the merchandise in September 2020. How will the company report the forward contract on its June 30, 2020 balance sheet? A $1,300 liability B. $1,300 asset O C. $1,000 asset D.$1,000 liability1. Use the information on the U.S. dollar value of the pound sterling to answer the following question(s)- Spot Rate Forward Rate for August 16, 2020 Delivery May 16, 2020 $1.380 $1.375 June 30, 2020 1.390 1.38 August 16, 2020 1.400 1.400 2. On May 16, 2020, a U.S. company takes delivery of $100,000 in merchandise from a U.K. supplier. The company will pay the supplier $100,000 on August 16. On May 16, the company also enters a forward contract to buy $100,000 on August 16, 2020. On August 16, the company purchases $100,000 using the forward contract, and pays the September 2020. supplier. The company's accounting year ends June 30, and it sells the merchandise in What is the net effect on fiscal 2020 income of exchange rate changes due to the purchase and the forward contract? O A $300 net gain B. no effect C $2,300 net loss D.$300 net loss
