Assume that Lewis International sells running shoes to a British importer on June 1 and that the sale is denominated at £75,000 and will be collected on July 15. Also assume that Lewis closes its books at the end of each month. The following are the relevant exchange rates.
$ \begin{array}{ll}\text { Spot rate on June 1 } & \$ 1.6200 \ \text { Forward rate for July } & \ \text { 15 delivery } & \$ 1.6000 \ \text { Spot rate on June 30 } & \$ 1.6100 \ \text { Spot rate on July 15 } & \$ 1.5950\end{array} $

For questions 25-29, assume FASB Statement 52 treatment and that Lewis enters into a forward contract.
-What is the dollar value of the sale on July 15?

Question

Assume that Lewis International sells running shoes to a British importer on June 1 and that the sale is denominated at £75,000 and will be collected on July 15. Also assume that Lewis closes its books at the end of each month. The following are the relevant exchange rates.
 $ \begin{array}{ll}\text { Spot rate on June 1 } & \$ 1.6200 \ \text { Forward rate for July } & \ \text { 15 delivery } & \$ 1.6000 \ \text { Spot rate on June 30 } & \$ 1.6100 \ \text { Spot rate on July 15 } & \$ 1.5950\end{array} $

For questions 25-29, assume FASB Statement 52 treatment and that Lewis enters into a forward contract.
-What is the dollar value of the sale on July 15?

Quizplus · Accepted Answer

To determine the dollar value of the sale on July 15, we need to use the exchange rate on that date, which is £1 = $1.61. Therefore, £75,000 * $1.61/£ = $120,750.

Assume That Lewis International Sells Running Shoes to a British