Taste Bits Inc

question 21

Multiple Choice

Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (SFr) on December 1, 20X8. Payment is due on January 30, 20X9. On December 1, 20X8, the company also entered into a 60-day forward contract to purchase 100,000 Swiss francs. The forward contract is not designated as a hedge. The rates were as follows:

-Based on the preceding information,the entries on January 30,20X9,include a:

• A) Debit to Dollars Payable to Exchange Broker, $180,000.
• B) Credit to Cash, $184,000.
• C) Credit to Premium on Forward Contract, $4,000.
• D) Credit to Foreign Currency Receivable from Exchange Broker, $180,000.

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Definitions:

Territoriality

The behavior of animals or groups in defending a specific area against others of the same or different species, often linked to resources or mating opportunities.

Potential Costs

Possible negative outcomes or expenditures of resources that may result from a particular action or strategy.

Potential Benefit

A possible advantage or positive outcome that could arise from a specific action or situation.

Dispersal

The movement of individuals or seeds away from their area of origin or from high population density areas to new locations for breeding or growth.