Question
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,
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
$0.725
$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:
A. $73,000 B. $73,200 C. $72,700 D. $75,000
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Management Accounting Information for creating and managing value
Authors: Kim Langfield Smith, David Smith, Paul Andon, Ronald Hilton, Helen Thorne
8th edition
9781760420413 , 978-1760420406
