(Answered) Question - on november 1 2011 american company sold

Accounting

Question - On November 1, 2011, American Company sold inventory to a foreign customer. The account will be settled on March 1 with the receipt of $450,000 foreign currency units (FCU). On November 1, American also entered into a forward contract to hedge the exposed asset. The forward rate is $0.70 per unit of foreign currency. American has a December 31 fiscal year-end. Spot rates on relevant dates were:

Date Per unit of foreign currency

Nov 1 .73

Dec 31 .71

Mar 1 .74

What will be the adjusted balance in the Accounts Receivable account on December 31, and how much gain or loss was recorded as a result of the adjustment?

Receivable Balance Gain/Loss Recorded

a. $319,500 $9,000 gain

b. $319,500 $9,000 loss

c. $333,000 $4,500 gain

d. $333,000 $18,000 gain

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