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Washington Enterprises sells apples to food processors in the Asian countries. On July 31, it enters into an agreement to sell apples to a foreign company for P50,000,000 foreign currency units (FCUs). The apples will be delivered October 15 with payment due on November 15. On July 31, Washington entered into forward exchange contract to hedge its foreign currency receivable on November 15. The spot and November 15 forward exchange rates on July 31 are 1 FCU = P0.0085 and 1 FCU = P0.0092, respectively. Washington prepares quarterly financial statements with a December 31 year-end. The relevant exchange rates and forward contract fair values are as follows:

Date	Spot Rate	11/15 Forward Rate
Sept. 30	P0.0084	P0.0090
Oct. 15	P0.0087	P0.0087
Nov. 15	P0.0086	P0.0086

What is the value recognized in the financial accounting records on July 31 for the forward contract?

a.Nil

b.P460,000

c.P30,000

d.P430,000

What is the gain or loss on the forward contract at September 30?

a. P25,000

b.P30,000

c.P15,000

d.P10,000

What is the net gain or loss on the income statement at September 30?

a.Nil

b.P5,000

c.P15,000

d.P10,000

What is the gain or loss on the forward contract at October 15?

a.P30,000

b.P10,000

c.P15,000

d.P25,000

What is the net gain or loss on the income statement at October 15?

a.P25,000

b.Nil

c.P5,000

d.P15,000

What is the net sales recorded on the income statement at October 15?

a.P440,000

b.P460,000

c.P485,000

d.P465,000

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