REFERENCE: Ref.09_10 on October 1,2007,Eagle Company Forecasts the Purchase of Inventory from Inventory

question 76

Multiple Choice

REFERENCE: Ref.09_10
On October 1,2007,Eagle Company forecasts the purchase of inventory from a British supplier on February 1,2008,at a price of 100,000 British pounds.On October 1,2007,Eagle pays $1,800 for a three-month call option on 100,000 pounds with a strike price of $2.00 per pound.The option is considered to be a cash flow hedge of a forecasted foreign currency transaction.On December 31,2007,the option has a fair value of $1,600.The following spot exchange rates apply:
-What journal entry should Eagle prepare on December 31,2007?

• A)A above.
• B)B above.
• C)C above.
• D)D above.
• E)E above.

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Definitions:

QuickBooks Lists

Features within QuickBooks software that organize data into manageable categories like vendors, customers, and inventory items for easy access and management.

Opening Balance

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New Account

The initial setup or registration of an account in a financial system or online service.

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