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Ket [755]
3 years ago
12

On April 1, Quality Corporation, a U.S. company, expects to sell merchandise to a French customer in three months, denominating

the transaction in euros. On April 1, the spot rate is $1.41 per euro, and Quality enters into a three-month forward contract cash flow hedge to sell 400,000 euros at a rate of $1.36. At the end of three months, the spot rate is $1.37 per euro, and Quality delivers the merchandise, collecting 400,000 euros. What are the effects on net income from these transactions?
a. $8,000 Discount Expense plus a $12,000 negative Adjustment to Net Income when the merchandise is delivered.
b. $8,000 Discount Expense plus a $12,000 positive Adjustment to Net Income when the merchandise is delivered.
c. $8,000 Discount Expense plus a $20,000 negative Adjustment to Net Income when the merchandise is delivered.
d. $8,000 Discount Expense plus a $20,000 positive Adjustment to Net Income when the merchandise is delivered.
e. $8,000 Discount Expense plus an $8,000 positive Adjustment to Net Income when the merchandise is delivered.
Business
1 answer:
KengaRu [80]3 years ago
8 0

Answer:

The correct answer is option (d) $8,000 Discount Expense plus a $20,000 positive Adjustment to Net Income when the merchandise is delivered.

Explanation:

Solution

Given that:

Spot rate:

1 euro = $1.41

Now,

Converting 400,000 euros into dollars gives us the following

400,000*1.41 =$564,000

Thys,

Contract rate,

=1 euro = $1.36

So,

Converting 400,000 euros into dollars gives us

400,000*1.36 = $544,000.00

Hence,

The increase  in net income =$564,000- $544,000

=$20,000

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Lubov Fominskaja [6]

Answer:

The correct answer is  a. an inadequate infrastructure.

Explanation:

An infrastructure is the set of elements or services that are considered necessary for an organization to function or for an activity to develop effectively.

On the other hand, the infrastructure is the material basis of a society and the one that will determine the social structure, development and social change of the same, including in these levels the productive forces and the relations of production that occur therein.

3 0
3 years ago
Foote Company recorded a purchase discount of $200 on merchandise the company had purchased on account a few days ago. Foote use
romanna [79]

Answer:

B. n/a (200) 200 200 n/a 200 n/a

Explanation:

A purchase discount is a contra-expense account which has a credit balance. Expenses have normal debit balances, so a credit balance will decrease the expenses incurred by the company.

E.g. you paid $100 within the discount period (2% discount)

Dr Accounts payable 100

    Cr Cash 98

    Cr Purchase discounts 2

This transaction doe snot affect assets, but it will decrease liabilities by $200 and increase R.E. by $200. Since this is a contra expense account, it will increase revenue and net income. It doesn't generate any additional cash flows.

7 0
3 years ago
Which of the following is a fixed expense for Maria's sandwich food truck?
babymother [125]

Answer:

Salaries for her employees

Explanation

5 0
3 years ago
on january 1, you sold short one round lot (that is, 100 shares) of snow’s stock at $21 per share. on march 1, a dividend of $3
bezimeni [28]

Thanks For Sharing.

on january 1, you sold short one round lot (that is, 100 shares) of snow’s stock at $21 per share. on march 1, a dividend of $3 per share was paid. on april 1, you covered the short sale by buying the stock at a price of $15 per share. you paid 50 cents per share in commissions for each transaction.

7 0
2 years ago
RideShare offers short-term rentals of vehicles that are kept in small lots in urban neighborhoods with plenty of potential cust
Free_Kalibri [48]

Answer:

a. Offered load = 1 lot / 4 hours = 6 cars/4 hours = 1.5 cars/hours

b. Demand rate = Total cars per 4 hours/20 minutes time

Demand rate = 6*4 / 20

Demand rate = 24/20

Demand rate = 1.2 cars/hours

Implied utilization = Demand rate / Offered load

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c. Capacity of the process = 1 lot / 5 hours

Capacity of the process = 6 / 5

Capacity of the process = 1.2 rentals per hours

d. Probability that all eight cars are rented at the same time

=> (1 - 0.8) * (0.8)^8

=> 0.2 * 0.1678

=> 0.03356

=> 3.36

5 0
3 years ago
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