The Following Information Pertains to Questions

question 27

Multiple Choice

The following information pertains to questions
ABC Inc.sells thermal compressors throughout the world.On January 1,2013,the company sold 500 compressors to an American supplier at a total cost $60,000 U.S.when the spot rate was US$1=$1.1750CDN.Payment on the invoice was due by May 1,2013.ABC entered into a 4-month hedge with its bank at a forward rate of $1.20CDN on January 2,2013.ABC's year-end is on January 31,and on that date in 2013,the spot rate in effect was $1.1825CDN.
ABC received payment from its supplier on May 1,2013 when the spot rate was US$1=$1.1975 CDN.
-What is the required adjustment to ABC's accounts receivable at year-end as a result of this transaction?

• A)Nil.
• B)$450 Increase
• C)$900 Increase
• D)$450 Decrease

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Definitions:

Dependent Demand

Demand for components or materials directly tied to the production of another product, typically calculated rather than forecasted.

Quick Response

An inventory strategy that aims to reduce lead times and increase supply chain flexibility to meet customer demand more effectively.

Multiple Orders

The process of placing or receiving more than one order for products or services at the same time or within a similar timeframe.

Manufacturer

An entity or business that produces goods, usually on a large scale, involving machinery, tools, and labor.