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frutty [35]
3 years ago
7

Woolsey Corporation, a U.S. company, expects to sell goods to a British customer at a price of 250,000 pounds, with delivery and

payment to be made on October 24. On July 24, Woolsey purchased a three-month put option for 250,000 British pounds and designated this option as a cash flow hedge of a forecasted foreign currency transaction expected to be completed in late October. The following exchange rates apply:
Option Strike Price = $2.17
Option Cost : $4,000
July 24th Spot Rate : $2.17
October 24th Spot Rate :$2.13
October 24th Option Premium : $.04
What amount will Woolsey include as Adjustment to Net Income for the period ended October 31?
A. $6,000 positive.
B. $6,000 negative.
C. $10,000 positive.
D. $10,000 negative.
E. $14,000 positive.
Business
1 answer:
iragen [17]3 years ago
5 0

Answer:

C. $10,000 positive.

Explanation:

The computation of the amount that should be included is shown below:

= (Option strike price - spot rate) × purchased put options

= ($2.17 - $2.13) × 250,000

= $10,000

As the spot rate is less than the strike price so automatically there is a gain of $10,000

Hence, the option c is correct

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For the year ended December 31, 2021, Fidelity Engineering reported pretax accounting income of $984,000. Selected information f
Sati [7]

Answer and Explanation:

According to the scenario, computation of the given data are as follow:-

1).

Particular Amount ($) Tax rate                  Tax amount($)

Accounting income $984,000  

Less-Interest income on municipal bond -$40,000  

Income to taxation $944,000 $0.25                 $236,000

Less-tax return in excess of depreciation -$64,000 0.25 $16,000

Warranty expenses($30,000-$20,000) $10,000 0.25 $2,500

Taxable income $890,000 0.25 $222,500

Now

Journal Entry

Income tax expense A/c      Dr.$236,000

Deferred  tax asset A/c      Dr.$2500

To Deferred  tax liability A/c   $16,000

To Income tax payable A/c        $222,500  

(Being the income tax  expense for 2021 is recorded )

2 .Net Income of Fidelity = Accounting Income - Income Tax Expense

= $984,000 - $236,000

= $784,000

6 0
3 years ago
13, a company has recently outsourced its payroll process to a third-party service provider. an audit team was scheduled to audi
MrRissso [65]
<span>As the outsourcing decision is not in the audit term therefore the audit team is not needed to take it into consideration. Audit team is required to work for those matters which are in the term for which it is hired. Notes can be mentioned that outsourcing is used in the next term.</span>
5 0
3 years ago
The $1,000 face value ABC bond has a coupon rate of 10%, with interest paid annually, and matures in 3 years. If the bond is pri
dybincka [34]

Answer:

Bond Price  = $951.9633746 rounded off to $951.96

Explanation:

To calculate the quote/price of the bond today, which is the present value of the bond, we will use the formula for the price of the bond. As the bond is an annual bond, we will use the annual coupon payment,  annual number of periods and annual YTM. The formula to calculate the price of the bonds today is attached.  

Coupon Payment (C) = 1000 * 10% = $100

Total periods remaining (n) = 3

r or YTM = 12%  

 Bond Price = 100 * [( 1 - (1+0.12)^-3) / 0.12]  + 1000 / (1+0.12)^3

Bond Price  = $951.9633746 rounded off to $951.96

7 0
3 years ago
A company started the year with $10,000 of inventory. Purchases for resale during the year were $20,000. Inventory on December 3
Monica [59]

The inventory indicates that the cost of goods sold will be $25000.

<h3>How to calculate the cost of goods sold</h3>

It should be noted that the cost of goods sold ic calculated through the formula:

= Opening inventory + Purchases - Closing inventory

= $10000 + $20000 - $5000

= $25000

Therefore, the cost of goods sold is $25000.

Learn more about inventory on:

brainly.com/question/24868116

7 0
2 years ago
) going to the wholesale club, one can buy toothpaste at a lower cost per unit as long as one buys 6 tubes at once. this is an e
sergejj [24]
The answer is imperfect price discrimination and this increase total producer surplus. 

Imperfect price discrimination
it is about the monopoly of pricing to get the customers. The seller applies a strategy to get the market from buying the products. Then set customers by the group, those who buy for wholesale gets a lower price than in retail.
6 0
3 years ago
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