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

1.388

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.

How will the company report the forward contract on its June 30, 2020 balance sheet?

A. $1,000 asset B. $1,300 asset C. $1,000 liability D. $1,300 liability