On August 1st of the Current Year, Lenz Company Writes

question 38

Multiple Choice

On August 1st of the current year, Lenz Company writes a contract agreeing to sell to Hindman Company 15,000 British pounds at a specific price of $0.69 per pound with delivery in 60 days.Throughout the 60-day period the forward rate varies as follows: ?

$\begin{array}{ll}60 \text { days remaining on the contract } & \$ 0.69 \\30 \text { days remaining on the contract } & \$ 0.68 \\0 \text { days remaining on the contract } & \$ 0.675\end{array}$
Assume an 8% discount rate for Lenz Company and Hindman Company.For the first 30 day period, Lenz Company would recognize a:

• A)$149 loss.
• B)$149 gain.
• C)$150 loss.
• D)$150 gain.

---

Definitions:

Social Security Benefits

Government-financed programs providing retirement, disability, survivorship, and death benefits to eligible individuals.

Exempt Amount

The portion of income or value that is not subject to tax or is excluded from calculation under certain conditions or allowances.

Family And Medical Leave Act

A U.S. law that provides employees with unpaid, job-protected leave for family and medical reasons, with continuation of group health insurance coverage.

Market Value

The current price at which an asset or service can be bought or sold in a marketplace.