On March 1, 2021, Mattie Company Received an Order to Sell

question 23

Multiple Choice

On March 1, 2021, Mattie Company received an order to sell a machine to a customer in England at a price of 200,000 British pounds. The machine was shipped and payment was received on March 1, 2022. On March 1, 2021, Mattie purchased a put option giving it the right to sell 200,000 British pounds on March 1, 2022 at a price of $380,000. Mattie properly designates the option as a fair hedge of the pound firm commitment. The option cost $2,000 and had a fair value of $2,200 on December 31, 2021. The following spot exchange rates apply: Mattie's incremental borrowing rate is 12%, and the present value factor for two months at a 12% annual rate is 0.9803.What was the net impact on Mattie's 2022 income including the fair value hedge of a firm commitment?

• A)$379,760.60 decrease.
• B)$8,360.60 increase.
• C)$8,360.60 decrease.
• D)$4,390.40 decrease.
• E)$379,760.60 increase.

Record transactions related to merchandise returns and allowances.

Analyze the effects of trade discounts on inventory accounting.

Understand the implication of FOB shipping point and FOB destination terms on freight costs.

Record the journal entries for the sale of merchandise, including scenarios with sales tax.

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