Taste Bits Inc. purchased chocolates from Switzerland for 200,000 Swiss francs (SFr) on December 1, 20X8. Payment is due on January 30, 20X9. On December 1, 20X8, the company also entered into a 60-day forward contract to purchase 200,000 Swiss francs. The forward contract is not designated as a hedge. The rates were as follows: Spot Rate Forward RateDecember 1, 20X8$0.89 $0.90(60 days)December 31, 20X8 0.91 0.93(30 days)January 30, 20X9 0.92 Based on the preceding information, the entries on December 31, 20X8 related to the forward contract include a:
A. Debit to Foreign Currency Receivable from Exchange Broker, $6,000.
B. Debit to Foreign Currency Transaction Gain, $4,000.
C. Debit to Foreign Currency Receivable from Exchange Broker, $186,000.
D. Credit to Foreign Currency Payable to Exchange Broker, $4,000.
Answer: A
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