Use the Following Information on the U On May 16, 2020, a U

Multiple Choice

Use the following information on the U.S. dollar value of the pound sterling
to answer bellow Questions
$$\begin{array} { | l | c | c | } \hline & \text { Spot Rate } & \begin{array} { c } \text { Forward Rate for } \\\text { August 16, 2020 Delivery }\end{array} \\\hline \text { May 16, 2020 } & \$ 1.380 & \$ 1.375 \\\hline \text { June 30, 2020 } & 1.390 & 1.388 \\\hline \text { August 16, 2020 } & 1.400 & 1.400 \\\hline\end{array}$$ On May 16, 2020, a U.S. company takes delivery of £100,000 in merchandise from a U.K. supplier. The company will pay the supplier £100,000 on August 16. On May 16, the company also enters a forward contract to buy £100,000 on August 16, 2020. On August 16, the company purchases £100,000 using the forward contract, and pays the supplier. The company's accounting year ends June 30, and it sells the merchandise in September 2020.
-How will the company report the forward contract on its June 30, 2020 balance sheet?

A) $1,000 asset
B) $1,000 liability
C) $1,300 asset
D) $1,300 liability