On December 1, 20X5, Gillard Ltd. sold goods to International Traders Ltd., a company located in Switzerland, for 500,000 Swiss francs (CHF). At the date of sale, the spot rate was CHF1 = $1.0329. On the same date, Gillard acquired a 90-day forward contract at a rate of CHF1 = $1.0315. On March 1, 20X6, Gillard received full payment from International Traders and delivered the Swiss francs in execution of the forward contract. The spot rate at March 1, 20X6, was CHF1 = $1.0287. Assume that Gillard has a December 31 year-end and that the spot rate on that date was CHF1 = $1.0302. At December 31, the forward rate for a 60-day contract was CHF1 = 1.0394.
- At December 31, what is the balance of Gillard's accounts receivable?

Question

Quizplus · Accepted Answer

The accounts receivable balance at December 31 is calculated using the spot rate on that date. The amount in Swiss francs is 500,000 CHF, and the spot rate on December 31 is CHF1 = $1.0302. Therefore, the balance is 500,000 CHF * $1.0302 = $515,100.