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A U. S. company estimated that, in the first two months of 2026, its export...

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Accounting

A U. S. company estimated that, in the first two months of 2026, its export sales to a Swiss company would generate 410,000 francs. On December 1, 2025, in an effort to protect against the weakening franc, the company purchased an option (out of money) to sell 410,000 Swiss francs at an exchange rate of $.60 with an expiration date of February 25, 2026. The cost of the option was $5,500. The spot rates on the following dates were

December 1, 2025, $0.62

December 31, 2025, $0.60

February 25, 2026, $0.57

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