Question $3$

On June $1,20$X$1,$ Alexander Corporation sold goods to a foreign

customer at a price of $1,000,000$ pesos and will receive payment in

three months on September $1,20$X$1.$ On June $1,$ Alexander acquired

an option to sell $1,000,000$ pesos in three months at a strike price of

$$0\mathrm{.}062.$ Relevant exchange rates and option premiums for the peso

are as follows:

June $1,$$$0\mathrm{.}062$$$0\mathrm{.}0025$

June $30,0\mathrm{.}061,0\mathrm{.}0032$

September

$1$

$0\mathrm{.}058($N$)/($A$)$

The time value of the option is excluded from the assessment of

hedge effectiveness and the change in time value is recognized in net

income. Alexander must close its books and prepare its second$-$

quarter financial statements on June $30.$ Assuming that Alexander

designates the foreign currency option as a fair value hedge of a

foreign currency receivable, what is the impact on $20$X$1$ net income

due to the sale transaction and the option?

$$60,300.$

$$61,700.$

$$61,000.$

$$62,000.$