When the merchandise is sold by the company, what is the cost of goods sold?

Use the following information on the U.S. dollar value of the euro.

	Spot Rate	Forward Rate for April 30, 2021 Delivery
October 30, 2020	$ 1.250	$ 1.254
December 31, 2020	1.258	1.256
April 30, 2021	1.260	1.260

On October 30, 2020, a U.S. company forecasts that it will purchase merchandise from an Italian supplier at the end of April 2021, in the amount of €100,000, and will pay the supplier on delivery. On October 30, the company enters a forward contract to buy €100,000 on April 30, 2021 and classifies it as a cash flow hedge of the forecasted purchase. On April 30, 2021, the company receives the merchandise, closes the forward contract and pays the supplier. The company's accounting year ends December 31.

When the merchandise is sold by the company, what is the cost of goods sold?

	A.	$125,000
	B.	$126,600
	C.	$125,400
	D.	$126,000

Solutions

Expert Solution

On the date oct 30,2021 forward contract

Forward rate : $ 1.254

€100,000 = $125400

On dec 31,2020 ,forward rate 1.256

€100,000 = $ 125600

Net gain = 125600 -125400

= $ 200 other compensive income

On purchase date = the cost of purchase d cost of good sold is

30 april 2021 = $ 1.260

€100,000 = 126000

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

During the current year, merchandise is sold for $8,920,000. The cost of the goods sold is...

During the current year, merchandise is sold for $8,920,000. The cost of the goods sold is $6,065,600. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. What is the amount of the gross profit? Round your answer to the nearest dollar. $ Compute the gross profit percentage (gross profit divided by sales). Round your answer to the nearest whole number. % Will the...

Hardy Company’s cost of goods sold is consistently 70% of sales. The company plans ending merchandise...

Hardy Company’s cost of goods sold is consistently 70% of sales. The company plans ending merchandise inventory for each month equal to 30% of the next month’s budgeted cost of goods sold. All merchandise is purchased on credit, and 40% of the purchases made during a month is paid for in that month. Another 45% is paid for during the first month after purchase, and the remaining 15% is paid for during the second month after purchase. Expected sales are:...

may 24 sold merchandise on account to old town cafe $18,450. the cost of goods sold...

may 24 sold merchandise on account to old town cafe $18,450. the cost of goods sold was $11,000. sept. receive$6,000 from old cafe and wrote off the remainder owed on the sale of may 24 as uncollectible

a. Sold $852,000 of merchandise on account, subject to a sales tax of 7%. The cost of the goods sold was $502,680.

Sales Tax TransactionsJournalize the entries to record the following selected transactions.a. Sold $852,000 of merchandise on account, subject to a sales tax of 7%. The cost of the goods sold was $502,680.If an amount box does not require an entry, leave it blank.Accounts ReceivableSalesSales Tax PayableCost of Goods SoldInventoryb. Paid $45,520 to the state sales tax department for taxes collected.If an amount box does not require an entry, leave it blank.Sales Tax PayableCash

8. If the cost of goods sold is $100,000, sales are $200,000, merchandise purchases are $37,000,...

8. If the cost of goods sold is $100,000, sales are $200,000, merchandise purchases are $37,000, and ending merchandise inventory is $10,000, then the beginning merchandise inventory must be: 9. A merchandiser plans to sell 14,600 units next month at a selling price of $110 per unit. It also gathered the following cost estimates for next month: Cost Cost Formula Cost of goods sold $60 per unit sold Advertising expense $150,000 per month Depreciation expense $70,000 per month Shipping expense...

in a periodic inventory system, cost of goods sold is recorded as each same of merchandise...

in a periodic inventory system, cost of goods sold is recorded as each same of merchandise occurs true/false

On May 11, Gradner Company sold $30,000 of merchandise to Dionne Company, the merchandise had cost...

On May 11, Gradner Company sold $30,000 of merchandise to Dionne Company, the merchandise had cost Gradner Company $22,000. Dionne Company accepted delivery on May 12, with terms 2/10, n/30, FOB Gradner Company’s factory. When the goods were delivered, Express Shipping was paid $300 for the delivery charges on the merchandise. The next day, Dionne Company reported to Gradner that a few items were slightly dented, for which Gradner agreed to provide a credit of $1,800. On May 20, Dionne...

On average, a firm sells $2,500,000 in merchandise a month. Its cost of goods sold equals...

On average, a firm sells $2,500,000 in merchandise a month. Its cost of goods sold equals 60 percent of sales, and it keeps inventory equal to one-half of its monthly cost of goods on hand at all times. If the firm analyzes its accounts using a 360-day year, what is the firm's inventory conversion period? a. 30 days b. 15 days c. 20 days d. 360 days e. 10 days

Jan. 19 Sold merchandise on account to Dr. Kyle Norby, $17,910. The cost of the goods...

Jan. 19 Sold merchandise on account to Dr. Kyle Norby, $17,910. The cost of the goods sold was $9,920. June 2 Received $4,670 from Dr. Kyle Norby and wrote off the remainder owed on the sale of January 19 as uncollectible. Oct. 23 Reinstated the account of Dr. Kyle Norby that had been written off on June 2 and received $13,240 cash in full payment. Journalize the above transactions in the accounts of Canyon River Medical Co., a medical equipment...

c. February 7-sold merchandise on account for $800, and the cost of this merchandise sold was...

c. February 7-sold merchandise on account for $800, and the cost of this merchandise sold was $560. Account Name Increase or Decrease Amount Explanation: d. February 10-returned $500 on defective merchandise (list price) of the purchases dated February 3. Account Name Increase or Decrease Amount Explanation: e. February 11-paid the amount due of the purchased realized. Account Name Increase or Decrease Amount Explanation: f. February 12-accepted defective products returned that were sold by $150 on February 7, and the cost...

Subjects