Apple Company sold goods on account for 50,000 (L) pounds on November 2, 2006. On that same date, the controller entered into a forward contract to sell the pounds for $1.5920 on March 1, 2007. Apple Company's fiscal year ends on December 31, 2006. The following exchange rates were quoted on the dates mentioned above:
November 2, 2006: Spot Rate $1.6021
December 31, 2006: Spot Rate $1.5820
December 31, 2006: Forward contracts maturing on 3/3/07: $1.58
March 1, 2007: Spot Rate $1.6543
Required:
A. Prepare all necessary entries to account for the above transactions.
B. Indicate the net profit or loss due to foreign currency in the above transactions.