On January 5, 2019, our company receives a nonbinding purchase order for sale of merchandise to a customer in Slovakia, with delivery of the merchandise scheduled for June 30, 2019 The customer preliminarily agreed to pay 750,000 for the merchandise, and payment is due from the customer upon delivery On January 5, 2019, our company also purchases an option that gives our company the right to sell (i e , put) 750,000 on any date until June 30, 2019 (i e , it is an American style option) for $1 30 1 (i e , the spot rate on January 5, 2019) On January 5, 2019, the fair value of the option (i e , the option premium) is $22,500 In addition, our company elected to immediately include in the determination of net income all of the change in option value attributable to factors excluded from the assessment of hedge effectiveness (i e , the non intrinsic value components, like time value) The relevant exchange rates and related balances for the period from January 5, 2019, to June 30, 2019, are as follows Date Spot Rate ($ ) Sale Transaction FV Change in FV Intrinsic Value Change in Intrinsic Value Other Sources of Value Change in Other Sources of Value 1 5 19 1 30 $22,500 $22,500 d 3 31 19 1 25 51,000 $28,500 $37,500 b $37,500 13,500 $(9,000) 6 30 19 1 21 $907,500 67,500 16,500 67,500 c 30,000 (13,500) a Derived from an option pricing model such as the BlackScholes model b (650,000 $1 28 1) (650,000 $1 23 1) c (650,000 $1 28 1) (650,000 $1 19 1) d Fair value intrinsic value (i e , equals the residual fair value derived from all sources except for intrinsic value) a Reconcile to the forward rate at the option contract's inception the net cash received for both the sale of goods and the settlement of the option contract derivative b What amount of sales was recognized in the quarter ending March 31, 2019 What amount of sales was recognized in the quarter ending June 30, 2019 Explain these amounts What is the total amount of sales recognized across the quarters ending March 31 and June 30, 2019 Reconcile this total to your answer from part a

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On January 5, 2019, our company receives a nonbinding purchase order for sale of merchandise to a customer in Slovakia, with delivery of the merchandise

On January 5, 2019, our company receives a nonbinding purchase order for sale of merchandise to a customer in Slovakia, with delivery of the merchandise scheduled for June 30, 2019. The customer preliminarily agreed to pay 750,000 for the merchandise, and payment is due from the customer upon delivery. On January 5, 2019, our company also purchases an option that gives our company the right to sell (i.e., put) 750,000 on any date until June 30, 2019 (i.e., it is an American-style option) for $1.30:1 (i.e., the spot rate on January 5, 2019). On January 5, 2019, the fair value of the option (i.e., the option premium) is $22,500. In addition, our company elected to immediately include in the determination of net income all of the change in option value attributable to factors excluded from the assessment of hedge effectiveness (i.e., the non-intrinsic-value components, like time value). The relevant exchange rates and related balances for the period from January 5, 2019, to June 30, 2019, are as follows:

Date	Spot Rate ($ = )	Sale Transaction	FV	Change in FV	Intrinsic Value	Change in Intrinsic Value	Other Sources of Value	Change in Other Sources of Value
1/5/19	1.30	-	$22,500	-	-	-	$22,500^d	-
3/31/19	1.25	-	51,000	$28,500	$37,500^b	$37,500	13,500	$(9,000)
6/30/19	1.21	$907,500	67,500	16,500	67,500^c	30,000	-	(13,500)

a Derived from an option pricing model such as the BlackScholes model

b (650,000 $1.28:1) (650,000 $1.23:1)

c (650,000 $1.28:1) (650,000 $1.19:1)

d Fair value intrinsic value (i.e., equals the residual fair value derived from all sources except for intrinsic value)

a. Reconcile to the forward rate at the option contract's inception the net cash received for both the sale of goods and the settlement of the option-contract derivative.

b. What amount of sales was recognized in the quarter ending March 31, 2019? What amount of sales was recognized in the quarter ending June 30, 2019? Explain these amounts. What is the total amount of sales recognized across the quarters ending March 31 and June 30, 2019? Reconcile this total to your answer from part a.