Question $4$

$On$ June $1,20X1,$ Alexander Corporation sold goods $to$ a foreign

customer $at$ a price $of1,000,000$ pesos and will receive payment $in$

three months $on$ September $1,20X1.On$ 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

$1$

$0\mathrm{.}058\frac{N}{A}$

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 cash flow hedge $ofa$

foreign currency receivable, what $is$ the impact $on$ net income over

the two accounting periods?

$$59,500.$

$$60,500.$

$$62,000.$

$$61,500.$