Question $3$

On November $1,20$X$1,$ Bernard Company $($a U$.$S$.-$based company$)$ sold merchandise to a foreign customer for $120,000$ FCUs with payment to be received on April $30,20$X$2.$ At the date of sale, Bernard entered into a six$-$month forward contract to sell $120,000$ FCUs. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight$-$line method on a monthly basis. The company properly designates the forward contract as a fair value hedge of a foreign currency receivable. The following exchange rates apply:

Date

Spot Rate

Forward Rate $($to April $30,202)$

November $1,20$X$1$

$\backslash$$ $0\mathrm{.}22$

$\backslash$$

$0\mathrm{.}21$

December $31,20$X$1$

$0\mathrm{.}20$

$0\mathrm{.}18$

April $30,20$X$2$

$0\mathrm{.}19$

N$/$A

What is the impact on net income in $2021$ due to the sale transaction from year $20$X$1$ and forward contract?

Increase net income by $\backslash (\backslash$$ $26,000\backslash ).$

Increase net income by $\backslash (\backslash$$ $26,800\backslash ).$

Decrease net income by $\backslash (\backslash$$ $1,200\backslash ).$

Increase net income by $\backslash (\backslash$$ $26,400\backslash ).$