On November 1, 2019, a U.S. company sells merchandise at a price of 200,000 to a...

 

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

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1 Merchandise will be reported on April 15 2020 at the spot rate as on that date H... View the full answer