Lawrence Company, a U

question 37

Multiple Choice

Lawrence Company, a U.S.company, ordered parts costing 1,000,000 Thailand bahts from a foreign supplier on July 7 when the spot rate was $.025 per baht.A one-month forward contract was signed on that date to purchase 1,000,000 bahts at a rate of $.027.The forward contract is properly designated as a fair value hedge of the 1,000,000 baht firm commitment.On August 7, when the parts are received, the spot rate is $.028.What is the amount of accounts payable that will be paid at this date?

• A) $20,000.
• B) $20,100.
• C) $25,000.
• D) $27,000.
• E) $28,000.

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Definitions:

Deductive Reasoning

A logical process in which a conclusion is based on the concordance of multiple premises that are generally assumed to be true.

Mnemonics

A technique used to improve memory by linking information to visual, auditory, or other memorable cues.

Improve Memory

Techniques or practices intended to enhance the ability to remember information or experiences.

Copula

A word used to link the subject of a sentence to a subject complement, typically a form of the verb “to be.”