On December 1, 20x1 Pimlico Made Sales to a Customer

question 37

Multiple Choice

On December 1, 20x1 Pimlico made sales to a customer in India and recorded Accounts Receivable of 10,000,000 rupees. The customer has until March 1, 20x2 to pay. On December 1, 20x1, Pimlico paid $500 for a put option to sell rupees at a strike price of $2.30 per 100 rupees on March 1, 20x2, which was the spot rate on December 1, 20x1. On December 31, 20x1, the spot rate was $2.80 per 100 rupees and the option premium was $0.004 per 100 rupees.
-If the spot rate on March 1, 20x2 was $2.45 per 100 rupees, what is the foreign currency exchange gain or loss that should be recorded that day?

• A)$15,000 gain
• B)$15,000 loss
• C)$35,000 gain
• D)$35,000 loss

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Definitions:

Parasympathetic Division

A branch of the autonomic nervous system responsible for conserving energy and slowing down the body's responses.

Autonomic Nervous System

A part of the nervous system that controls involuntary functions of the body, such as heart rate, digestion, and respiratory rate.

Frontal Lobe

The part of the brain located at the front of each cerebral hemisphere, associated with higher cognitive processes such as reasoning, planning, parts of speech, movement, emotions, and problem solving.

Parietal Lobe

An area in the cerebral cortex responsible for processing sensory data related to the positioning of body parts, as well as analyzing visual information and managing language and mathematical operations.