Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (

Question

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: SPOT RATES: December 1, 20X8= $0.89; December 31, 20X8=$0.91; January 30, 20X9=$0.92. FORWARD RATES: December 1, 20X8=$0.90 (60 days); December 31, 20X8=$0.93 (30 days). Based on the preceding information, the entries on January 30, 20X9, include a:

Credit to Premium on Forward Contract, $4,000.

Credit to Cash, $184,000.

Credit to Foreign Currency Receivable from Exchange Broker, $180,000.

Debit to Dollars Payable to Exchange Broker, $180,000.

Credit to Premium on Forward Contract, $4,000.

Credit to Cash, $184,000.

Credit to Foreign Currency Receivable from Exchange Broker, $180,000.

Debit to Dollars Payable to Exchange Broker, $180,000.

Explanation / Answer

Credit to forein currency receivable from exchange broker 180000

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