On November 1, 2019, a U Required
Fill in the Amounts Below, Appearing on the U

Essay

On November 1, 2019, a U.S. company sells merchandise at a price of £100,000 to a U.K. customer, with payment, in pounds sterling, to be received on March 1, 2020. On November 1, the company enters a forward contract for delivery of £100,000 on March 1, 2020. On March 1, 2020, the company receives the £100,000, and uses the forward contract to exchange the pounds for dollars. The U.S. company has a December 31 year-end. Spot and forward rates ($/£) are as follows:
$$\begin{array} { | l | c | c | } \hline & \text { Spot Rate } & \begin{array} { c } \text { Forward Rate for } \\\text { March 1, 2020 Delivery }\end{array} \\\hline \text { November 1, 2019 } & \$ 1.385 & \$ 1.381 \\\hline \text { December 31, 2019 } & 1.362 & 1.358 \\\hline \text { March 1, 2020 } & 1.318 & 1.318 \\\hline\end{array}$$ Required
Fill in the amounts below, appearing on the U.S. company's financial statements.
a. Investment in forward contract, December 31, 2019 balance sheet. Indicate whether it is an asset or a liability.
b. Gain or loss on forward contract, 2020 income statement. Indicate whether it is a gain or loss.
c. Gain or loss on accounts receivable, 2020 income statement. Indicate whether it is a gain or loss.