Net profit or loss due to foreign currency

Reference no: EM13154838

Apple Company sold goods on account for 50,000 (L) pounds on November 2, 2006. On that same date, the controller entered into a forward contract to sell the pounds for $1.5920 on March 1, 2007. Apple Company's fiscal year ends on December 31, 2006. The following exchange rates were quoted on the dates mentioned above:

November 2, 2006: Spot Rate $1.6021
December 31, 2006: Spot Rate $1.5820
December 31, 2006: Forward contracts maturing on 3/3/07: $1.58
March 1, 2007: Spot Rate $1.6543

Required:

A. Prepare all necessary entries to account for the above transactions.

B. Indicate the net profit or loss due to foreign currency in the above transactions.

Reference no: EM13154838

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