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:

Cast Iron Pipe

A type of durable pipe made from iron that has been cast in a mold, often used for water or sewage systems.

ABS Pipe

Acrylonitrile Butadiene Styrene pipe, a type of plastic piping used for waste water and vent lines due to its high resistance to impact and durability.

Valves

Mechanical devices that control the flow and direction of fluids in a system by opening, closing, or partially obstructing passageways.

Reducing Fittings

Pipe fittings used to connect pipes of different diameters, allowing for a change in pipe size.