On November 1, 20x1 Zamfir Company, a U -Assume That on November 1, 20x1 Zamfir Company Enters a Minerals

question 22

Multiple Choice

On November 1, 20x1 Zamfir Company, a U.S. corporation, purchased minerals from a Russian company for 2,000,000 rubles, payable in 3 months. The relevant exchange rates between the U.S. and Russian currencies are given: $\begin{array}{lll} & \text { Spot rate } & \text { Forward rate(at February 1,20 x 2) } \\\text { November 1,20 x 1 } 1 & \$ 0.348 & \$ 0.348\\\text {December 31,20 x1 }& \$ 0.359 & \$ 0.352 \\\text { February 1. 20 x 2 } & \$ 0.344 &\end{array}$
-Assume that on November 1, 20x1 Zamfir Company enters a forward contract to buy 2,000,000 rubles on February 1, 20x2.What is the fair value of the forward contract on December 31, 20x1?

• A)$8,000
• B)$7,800
• C)$22,000
• D)$8,200

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Definitions:

Acid-Test Ratio

is a financial metric that assesses a company's ability to pay off its current liabilities with its most liquid assets, excluding inventory.

Balance Sheet

An accounting document summarizing assets, liabilities, and owners' equity of a business on a specific date.

Sales On Account

Transactions where goods are sold and payment is deferred, allowing the buyer to pay at a later date, typically generating accounts receivable for the seller.

Average Sale Period

The average time it takes for a company to sell its inventory, often used to assess the efficiency of sales operations.