Assume That Lewis International Sells Running Shoes to a British

question 17

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. Also assume that Lewis closes its books at the end of each month. The following are the relevant exchange rates.
$\begin{array}{ll}\text { Spot rate on June 1 } & \$ 1.6200 \\ \text { Forward rate for July } & \\ \text { 15 delivery } & \$ 1.6000 \\ \text { Spot rate on June 30 } & \$ 1.6100 \\ \text { Spot rate on July 15 } & \$ 1.5950\end{array}$

For questions 25-29, assume FASB Statement 52 treatment and that Lewis enters into a forward contract.
-If Lewis had purchased merchandise rather than sold it, what would be your answer to question 30?

• A) $375 foreign exchange gain
• B) $375 foreign exchange loss
• C) $1500 foreign exchange loss
• D) $1500 foreign exchange gain

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Definitions:

Medical Asepsis

Practices aimed at reducing the number and spread of pathogens to prevent infection.

Mayo Stand

A stainless steel removable instrument tray set on a movable stand that is positioned over or adjacent to a surgical site; it provides a place for sterile instruments and supplies used during surgery.

Strikethrough

Condition in which fluid is able to penetrate through a drape.

Serrations

The toothlike projections on the edge of a tool such as a knife, saw, or scissors, designed to improve cutting efficiency.