Asked by
Courtney Riggs
on Oct 16, 2024Verified
Kreighton Manufacturing purchased on credit £50,000 worth of production materials from a British company when the exchange rate was $1.97 per British pound.At the year-end balance sheet date,the exchange rate increased to $2.76.If the liability is still unpaid at that time,Kreighton must record a:
A) gain of $39,500.
B) loss of $39,500.
C) gain of $138,000.
D) loss of $138,000.
E) neither a gain nor loss.
Exchange Rate
The cost of a nation's currency expressed in the currency of a different nation.
British Pound
The currency of the United Kingdom, widely used in international finance and trade.
Production Materials
Raw materials and components used in the manufacturing process to create finished goods.
- Gain an understanding of how foreign exchange transactions are accounted for and the consequences of exchange rate changes.
Verified Answer
RC
Learning Objectives
- Gain an understanding of how foreign exchange transactions are accounted for and the consequences of exchange rate changes.
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