On October 15, 2018, our U.S.-based company received a cancelable purchase order from a Luxembourg-based retailer. The purchase order states that our company will sell to the Luxembourgish company, on February 1, 2019, 70,000 units of an inventory item with a sales price of 10.00 each. The purchase order also specifies that the Luxembourgish company will make payment in Euros on that same date. Our company does recurring business with the Luxembourgish company; however, the cancelable purchase order includes no monetary penalties for nonperformance. Also, on October 15, 2018, our company entered into a contract with a foreign currency exchange broker to sell 700,000 (for settlement on February 1, 2019) to mitigate the risk of exchange rate fluctuation from this forecasted sale. We will receive $1.22 per 1, which is the forward rate on October 15, 2018, for settlement on February 1, 2019. Our companys functional currency is the U.S. dollar and our forward exchange contract qualifies as a cash flow hedge. The relevant exchange rates and related balances for the period from October 15, 2018, to February 1, 2019, are as follows:

DerivativeForward Date Spot Rate ($US = 1) Forecasted Sale Transaction Forward Ratea ($US = 1) FV Asset (Liability)b Change in FV

October 15, 2018 1.25 1.22

December 31, 2018 1.20 1.19 $21,000 $21,000

February 1, 2019 1.18 $826,000 1.18 28,000 7,000 b.

Reconcile to the forward rate at the forward contracts inception the net cash received for both the sale of goods and the settlement of the forward-contract derivative. Net cash received for sale of goods and settlement of the forward contract derivative is: $Answer