QUESTION 2 On November 1, 2019, a U.S. company sells merchandise at a price of 200,000 to a U.K. customer, with payment, in pounds sterling, to be received on March 1, 2020. On November 1, the company enters a forward contract for delivery of 200,000 on March 1, 2020. On March 1, 2020, the company receives the 200,000, and uses the forward contract to exchange the pounds for dollars. The U.S. company has a December 31 year-end and reports its financial statements in US$. Spot and forward rates ($/) are as follows: Forward Rate for At Spot Rate March 1, 2020 Delivery 11/1/2019 $1.385 $1.381 11/30/2019 $1.380 $1.385 12/31/2019 $1.362 $1.358 3/1/2020 $1.318 $1.318 Required: compute the amounts below (enter numbers ONLY, do NOT use currency symbols, commas or alpha-characters) a. December 31, 2019 Investment in Forward Contract balance on balance sheet (if liability, precede number with minus sign): b. 2019 gain or loss on Forward Contract (if loss, precede with a minus sign): c. 2019 gain or loss on Accounts Receivable (if loss, precede with a minus sign) d. 2020 gain or loss on Forward Contract (if loss, precede with a minus sign): e. 2020 gain or loss on Accounts Receivable (if loss, precede with a minus sign): QUESTION 2 On November 1, 2019, a U.S. company sells merchandise at a price of 200,000 to a U.K. customer, with payment, in pounds sterling, to be received on March 1, 2020. On November 1, the company enters a forward contract for delivery of 200,000 on March 1, 2020. On March 1, 2020, the company receives the 200,000, and uses the forward contract to exchange the pounds for dollars. The U.S. company has a December 31 year-end and reports its financial statements in US$. Spot and forward rates ($/) are as follows: Forward Rate for At Spot Rate March 1, 2020 Delivery 11/1/2019 $1.385 $1.381 11/30/2019 $1.380 $1.385 12/31/2019 $1.362 $1.358 3/1/2020 $1.318 $1.318 Required: compute the amounts below (enter numbers ONLY, do NOT use currency symbols, commas or alpha-characters) a. December 31, 2019 Investment in Forward Contract balance on balance sheet (if liability, precede number with minus sign): b. 2019 gain or loss on Forward Contract (if loss, precede with a minus sign): c. 2019 gain or loss on Accounts Receivable (if loss, precede with a minus sign) d. 2020 gain or loss on Forward Contract (if loss, precede with a minus sign): e. 2020 gain or loss on Accounts Receivable (if loss, precede with a minus sign)
