Assume That Lewis International Sells Running Shoes to a British

question 3

Multiple Choice

Assume that Lewis International sells running shoes to a British importer on June 1 and that the sale is denominated at £75,000 and will be collected on July 15. Assume the treatment of FASB Statement 52 and that no forward contract is entered into. Also assume that Lewis closes its books at the end of each month. The following are the relevant exchange rates.
$\begin{array}{ll}\text { Spot rate on June 1 } & \$ 1.6200 \\ \text { Forward rate for July } & \\ 15 \text { delivery } & \$ 1.6000 \\ \text { Spot rate on June 30 } & \$ 1.6100 \\ \text { Spot rate on July 15 } & \$ 1.5950\end{array}$
-What is the amount of the foreign exchange gain or loss that it will recognize on July 15?

• A) $1875 loss
• B) $ 750 loss
• C) $1125 loss
• D) $ 750 gain
• E) gain or loss is deferred

Understand the practical application of forecasting techniques, like moving averages and exponential smoothing, in real scenarios.

Grasp the essential distinction between qualitative and quantitative forecasting methods.

Learn the importance of adjusting forecasts based on new data and the principle of adaptive forecasting.

Understand the various digestive organs and their specific cellular components.

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Definitions:

Installment Sales Revenue

Revenue recognized from sales that are paid in installments over a period, rather than in a single transaction.

Installment Sales Method

An accounting technique used to recognize revenue from sales made on credit, where income is recognized proportionally as payments are received.

Recognized Gross Profit

Gross profit that has been realized and reported in the financial statements of a company, calculated as sales revenue minus the cost of goods sold.

Periodic Cash Proceeds

Periodic cash proceeds refer to the regular amounts of money received by a business over a specified period, such as from sales or investments.