Question : 55.Hayden, Inc. purchased knobs from a Greek company for 185,000 : 1259550

 

 

55.Hayden, Inc. purchased knobs from a Greek company for 185,000 Euros. On the purchase date the exchange rate was $0.80 per Euro, but when Hayden paid the liability, the exchange rate was $0.70 per Euro. When this foreign account payable was paid, Hayden, Inc., recorded a:   

A. Debit to Inventory of $18,500.

 

B. Loss of $18,500.

 

C. Credit to Accounts Payable of $148,000.

 

D. Gain of $18,500.

 

 

 

56.Tuliptime, Inc. sold American fashions to a Japanese company at a price of 4 million yen. On the sale date, the exchange rate was $0.0100 per Japanese yen, but when Tuliptime received payment from its customer, the exchange rate was $0.0103 per yen. When the foreign receivable was collected, Tuliptime:   

A. Credited Sales for $1,200.

 

B. Debited Cash for $40,000.

 

C. Credited Gain on Fluctuation of Foreign Currency for $1,200.

 

D. Debited Loss on Fluctuation of Foreign Currency for $1,200.

 

 

 

57.Barter Corp. sold American telecommunications equipment to a British company for 650,000 pounds. On the sale date, the exchange rate was $1.65 per British pound, but when Barter received payment from its customer, the exchange rate was $1.60 per pound. When the foreign receivable was collected, Barter Enterprises:   

A. Credited Sales for $32,500.

 

B. Debited Cash for $1,040,000.

 

C. Credited Gain on Fluctuation of Foreign Currency for $32,500.

 

D. Debited Loss on Fluctuation of Foreign Currency for $32,500.

 

 

 

58.Flynn Corporation purchased bicycles from a British manufacturer at a price of 45,000 British pounds on November 15, 2014 with payment due in 60 days. Using the following exchange rates, what gain or loss from currency fluctuations should be recognized in 2014 and 2015, respectively?     

A. A $2,250 loss in 2014 and a $900 gain in 2015.

 

B. No gain or loss in 2014 and a $1,350 loss in 2015.

 

C. A $2,250 gain in 2014 and a $900 loss in 2015.

 

D. No gain or loss in 2014 and a $1,350 gain in 2015.

 

 

 

59.Exact Instruments sold equipment to a British research group at a price of 70,000 British pounds on December 1, 2014 with payment due in 90 days. Using the following exchange rates, what gain or loss from currency fluctuations should be recognized in 2014 and 2015, respectively?     

A. A $2,800 loss in 2014 and a $3,500 gain in 2015.

 

B. No gain or loss in 2014 and a $700 loss in 2015.

 

C. A $2,800 gain in 2014 and a $3,500 loss in 2015.

 

D. No gain or loss in 2014 and a $700 gain in 2015.

 

 

 

60.Gains and losses from fluctuations in exchange rates should be shown on the:   

A. Balance sheet.

 

B. Income statement.

 

C. Statement of changes to owners’ equity.

 

D. Statement of cash flows.

 

 

 

 

61.On November 1, a French company purchased machinery from an American company for 800,000 Euros when the exchange rate was $0.83. When preparing financial statements on December 31, assuming the rate for Euros was $0.88, what amount of gain or loss should the American company report?   

A. $40,000 gain.

 

B. $40,000 loss.

 

C. $19,000 gain.

 

D. No gain or loss would be reported.

 

 

 

62.Assume the exchange rate for the Canadian dollar is rising relative to the U.S. dollar. An American company will incur losses from this rising exchange rate if it is making:   

A. Credit sales to Canadian companies at prices stated in Canadian dollars.

 

B. Credit purchases from Canadian companies at prices stated in U.S. dollars.

 

C. Credit sales to Canadian companies at prices stated in U.S. dollars.

 

D. Credit purchases from Canadian companies at prices stated in Canadian dollars.

 

 

 

 

63.Assume the exchange rate for the Mexican Peso is falling relative to the U.S. dollar. An American company will incur losses from this falling exchange rate if the company is making:   

A. Credit sales to Mexican companies at prices stated in U.S. dollars.

 

B. Credit purchases from Mexican companies at prices stated in U.S. dollars.

 

C. Credit sales to Mexican companies at prices stated in Mexican Pesos.

 

D. Credit purchases from Mexican companies at prices stated in Mexican Pesos.

 

 

 

 

64.Blue Waters is an American company that does business with several Japanese corporations. In recent months, Blue Waters has been reporting losses from increases in the exchange rate of the Japanese yen. The majority of Blue Waters transactions with the Japanese companies probably consist of:   

A. Credit sales at prices stated in U.S. dollars.

 

B. Credit sales at prices stated in Japanese yen.

 

C. Credit purchases at prices stated in U.S. dollars.

 

D. Credit purchases at prices stated in Japanese yen.