On December 1, 2001 Pimlico Made Sales to a Customer

Multiple Choice

On December 1, 2001 Pimlico made sales to a customer in India and recorded Accounts Receivable of 10,000,000 rupees. The customer has until March 1, 2002 to pay. On December 1, 2001, Pimlico paid $500 for a put option to sell rupees at a strike price of $2.30 per 100 rupees on March 1, 2002, which was the spot rate on December 1, 2001. On December 31, 2001, the spot rate was $2.80 per 100 rupees and the option premium was $0.004 per 100 rupees. If the spot rate on March 1, 2002 was $2.45 per 100 rupees, what is the foreign currency exchange gain or loss that should be recorded that day?

A) $15,000 gain
B) $15,000 loss
C) $35,000 gain
D) $35,000 loss