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 200,000 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 related to the forward contract 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.

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 200,000 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 related to the forward contract 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.

Quizplus · Accepted Answer

The Answer of 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 200,000 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 related to the forward contract 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.