Question
Woolsey Corporation, a U.S. company, expects to sell goods to a British customer at a price of 250,000 pounds, with delivery and payment to be
Woolsey Corporation, a U.S. company, expects to sell goods to a British customer at a price of 250,000 pounds, with delivery and payment to be made on October 24, 2021. On July 24, 2021, Woolsey purchased a three-month put option for 250,000 British pounds and designated this option as a cash flow hedge of a forecasted foreign currency transaction expected to be completed in late October, 2021. The following exchange rates apply:
Option strike price $ 2.17
Option cost $ 4,000
July 24 spot rate $ 2.17
October 24 spot rate $ 2.13
October 24 option premium $0.04
What amount will Woolsey record in AOCI to close it as an adjustment to net income for the period ended October 31?
Multiple Choice
$6,000 debit.
$6,000 credit.
$10,000 debit.
$10,000 credit.
$14,000 debit.
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