2
Advanced Financial Accounting Exam 4 || || || || ||
with verified detailed answers || || ||
Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment
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of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end.
|| || || || || || || || || || || || || || || || || ||
The pertinent exchange rates were as follows:
|| || || || || ||
May 8 $1.25 May 31 $1.26 June 6 $1.20
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How much Foreign Exchange Gain or Loss should Brisco record on May 31? - ✔✔$20,000 loss
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Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment
|| || || || || || || || || || || || || ||
of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end.
|| || || || || || || || || || || || || || || || || ||
The pertinent exchange rates were as follows:
|| || || || || ||
May 8 $1.25 May 31 $1.26 June 6 $1.20
|| || || || || || || ||
How much US $ will it cost Brisco to finally pay the payable on June 7? - ✔✔$2,400,000
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Pigskin Co., a U.S. corporation, sold inventory on credit to a British company on April 8. Pigskin
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received payment of 35,000 British pounds on May 8. The exchange rate was £1 = $1.54 on April
|| || || || || || || || || || || || || || || || || ||
8 and £1 = 1.43 on May 8. What amount of foreign exchange gain or lossshould be recognized?
|| || || || || || || || || || || || || || || || || ||
(round to the nearest dollar) - ✔✔$3,850 loss || || || || || || ||
Winston Corp., a U.S. company, had the following foreign currency transactions during 20X1:(1.)
|| || || || || || || || || || || ||
Purchased merchandise from a foreign supplier on July 16, 20X1 for the U.S. dollar equivalent of
|| || || || || || || || || || || || || || || || ||
$47,000 and paid the invoice on August 3, 20X1 at the U.S. dollar equivalent of $54,000.(2.) On
|| || || || || || || || || || || || || || || || ||
October 15, 20X1 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-
|| || || || || || || || || || || || ||
bearing note payable in euros on October 15, 20X2. The U.S. dollar equivalent of the note amount
|| || || || || || || || || || || || || || || ||
was $295,000 on December 31, 20X1, and $299,000 on October 15, 20X2.What amount should
|| || || || || || || || || || || || || || ||
be included as a foreign exchange gain or loss from the two transactions for 20X1? - ✔✔$13,000
|| || || || || || || || || || || || || || || || ||
gain
In accounting for foreign exchange currency, the United States uses - ✔✔Two-transaction
|| || || || || || || || || || || ||
perspective that accrues foreign exchange gains and losses || || || || || || ||
,2
A U.S. company sells merchandise to a foreign company denominated in the foreign currency.
|| || || || || || || || || || || || || ||
Which of the following statements is true? - ✔✔If the foreign currency appreciates, a foreign
|| || || || || || || || || || || || || || ||
exchange gain will result. || || ||
Winston Corp., a U.S. company, had the following foreign currency transactions during 20X1:(1.)
|| || || || || || || || || || || ||
Purchased merchandise from a foreign supplier on July 16, 20X1 for the U.S. dollar equivalent of
|| || || || || || || || || || || || || || || || ||
$47,000 and paid the invoice on August 3, 20X1 at the U.S. dollar equivalent of $54,000.(2.) On
|| || || || || || || || || || || || || || || || ||
October 15, 20X1 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-
|| || || || || || || || || || || || ||
bearing note payable in euros on October 15, 20X2. The U.S. dollar equivalent of the note amount
|| || || || || || || || || || || || || || || ||
was $295,000 on December 31, 20X1, and $299,000 on October 15, 20X2.What amount should
|| || || || || || || || || || || || || || ||
be included as a foreign exchange gain or loss from the two transactions for 20X2? - ✔✔$4,000
|| || || || || || || || || || || || || || || || ||
loss
On July 1, 20X1, Houghton Company borrowed 200,000 euros from a foreign lender evidenced
|| || || || || || || || || || || || || ||
by an interest-bearing note due on July 1, 20X2. The note is denominated in euros. The U. S.
|| || || || || || || || || || || || || || || || || ||
dollar equivalent of the note principal is as follows:
|| || || || || || || ||
July 1, 20X1 (date borrowed) $195,000
|| || || || ||
December 31, 20X1 (Houghton's year-end) 220,000 || || || || ||
July 1, 20X2 (date repaid) 230,000
|| || || || ||
In its 20X2 income statement, what amount should Houghton include as a foreign exchange gain
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or loss on this note? - ✔✔$10,000 loss
|| || || || || || ||
The foreign exchange rate for the immediate delivery of currencies exchanged is called the -
|| || || || || || || || || || || || || || ||
✔✔spot rate ||
Norton Co., a U.S. corporation, sold inventory on December 1, with payment of 10,000 British
|| || || || || || || || || || || || || || ||
pounds to be received in sixty days. The pertinent exchange rates were as follows:
|| || || || || || || || || || || || ||
December 1 $1.7241 || ||
December 31 $1.8182 || ||
January 30 $1.6666 || ||
, 2
What amount of foreign exchange gain or loss should be recorded on January 30? - ✔✔$1,516
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loss
A U.S. company buys merchandise from a foreign company denominated in the foreign currency.
|| || || || || || || || || || || || || ||
Which of the following statements is true? - ✔✔If the foreign currency appreciates, a foreign
|| || || || || || || || || || || || || || ||
exchange loss will result. || || ||
On April 1, 20X1, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign
|| || || || || || || || || || || || || || ||
bank by signing a non interest-bearing note due April 1, 20X2. The dollar value of the loan was as
|| || || || || || || || || || || || || || || || || ||
follows:
||
April 1, 20X1 $97,000 || || ||
December 31, 20X1 $103,000 || || ||
April 1, 20X2 $105,000 || || ||
How much foreign exchange gain or loss should be included in Shannon's 20X2 income
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statement? - ✔✔$2,000 loss || || ||
Which one of the following relationships between fluctuations in exchange rates and foreign
|| || || || || || || || || || || || ||
exchange gains and losses is true? - ✔✔For an export sale, a gain results when foreign currency
|| || || || || || || || || || || || || || || || ||
appreciates
Norton Co., a U.S. corporation, sold inventory on December 1, with payment of 10,000 British
|| || || || || || || || || || || || || || ||
pounds to be received in sixty days. The pertinent exchange rates were as follows:
|| || || || || || || || || || || || ||
December 1$1.7241December 311.8182January 301.6666 || || ||
For what amount should Sales be credited on December 1? - ✔✔$17,241
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Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment
|| || || || || || || || || || || || || ||
of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end.
|| || || || || || || || || || || || || || || || || ||
The pertinent exchange rates were as follows:
|| || || || || ||
May 8$1.25May 311.26June 61.20|| || ||
For what amount should Brisco's Accounts Payable be credited on May 8? - ✔✔$2,500,000
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Advanced Financial Accounting Exam 4 || || || || ||
with verified detailed answers || || ||
Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment
|| || || || || || || || || || || || || ||
of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end.
|| || || || || || || || || || || || || || || || || ||
The pertinent exchange rates were as follows:
|| || || || || ||
May 8 $1.25 May 31 $1.26 June 6 $1.20
|| || || || || || || ||
How much Foreign Exchange Gain or Loss should Brisco record on May 31? - ✔✔$20,000 loss
|| || || || || || || || || || || || || || ||
Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment
|| || || || || || || || || || || || || ||
of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end.
|| || || || || || || || || || || || || || || || || ||
The pertinent exchange rates were as follows:
|| || || || || ||
May 8 $1.25 May 31 $1.26 June 6 $1.20
|| || || || || || || ||
How much US $ will it cost Brisco to finally pay the payable on June 7? - ✔✔$2,400,000
|| || || || || || || || || || || || || || || || ||
Pigskin Co., a U.S. corporation, sold inventory on credit to a British company on April 8. Pigskin
|| || || || || || || || || || || || || || || || ||
received payment of 35,000 British pounds on May 8. The exchange rate was £1 = $1.54 on April
|| || || || || || || || || || || || || || || || || ||
8 and £1 = 1.43 on May 8. What amount of foreign exchange gain or lossshould be recognized?
|| || || || || || || || || || || || || || || || || ||
(round to the nearest dollar) - ✔✔$3,850 loss || || || || || || ||
Winston Corp., a U.S. company, had the following foreign currency transactions during 20X1:(1.)
|| || || || || || || || || || || ||
Purchased merchandise from a foreign supplier on July 16, 20X1 for the U.S. dollar equivalent of
|| || || || || || || || || || || || || || || || ||
$47,000 and paid the invoice on August 3, 20X1 at the U.S. dollar equivalent of $54,000.(2.) On
|| || || || || || || || || || || || || || || || ||
October 15, 20X1 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-
|| || || || || || || || || || || || ||
bearing note payable in euros on October 15, 20X2. The U.S. dollar equivalent of the note amount
|| || || || || || || || || || || || || || || ||
was $295,000 on December 31, 20X1, and $299,000 on October 15, 20X2.What amount should
|| || || || || || || || || || || || || || ||
be included as a foreign exchange gain or loss from the two transactions for 20X1? - ✔✔$13,000
|| || || || || || || || || || || || || || || || ||
gain
In accounting for foreign exchange currency, the United States uses - ✔✔Two-transaction
|| || || || || || || || || || || ||
perspective that accrues foreign exchange gains and losses || || || || || || ||
,2
A U.S. company sells merchandise to a foreign company denominated in the foreign currency.
|| || || || || || || || || || || || || ||
Which of the following statements is true? - ✔✔If the foreign currency appreciates, a foreign
|| || || || || || || || || || || || || || ||
exchange gain will result. || || ||
Winston Corp., a U.S. company, had the following foreign currency transactions during 20X1:(1.)
|| || || || || || || || || || || ||
Purchased merchandise from a foreign supplier on July 16, 20X1 for the U.S. dollar equivalent of
|| || || || || || || || || || || || || || || || ||
$47,000 and paid the invoice on August 3, 20X1 at the U.S. dollar equivalent of $54,000.(2.) On
|| || || || || || || || || || || || || || || || ||
October 15, 20X1 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-
|| || || || || || || || || || || || ||
bearing note payable in euros on October 15, 20X2. The U.S. dollar equivalent of the note amount
|| || || || || || || || || || || || || || || ||
was $295,000 on December 31, 20X1, and $299,000 on October 15, 20X2.What amount should
|| || || || || || || || || || || || || || ||
be included as a foreign exchange gain or loss from the two transactions for 20X2? - ✔✔$4,000
|| || || || || || || || || || || || || || || || ||
loss
On July 1, 20X1, Houghton Company borrowed 200,000 euros from a foreign lender evidenced
|| || || || || || || || || || || || || ||
by an interest-bearing note due on July 1, 20X2. The note is denominated in euros. The U. S.
|| || || || || || || || || || || || || || || || || ||
dollar equivalent of the note principal is as follows:
|| || || || || || || ||
July 1, 20X1 (date borrowed) $195,000
|| || || || ||
December 31, 20X1 (Houghton's year-end) 220,000 || || || || ||
July 1, 20X2 (date repaid) 230,000
|| || || || ||
In its 20X2 income statement, what amount should Houghton include as a foreign exchange gain
|| || || || || || || || || || || || || || ||
or loss on this note? - ✔✔$10,000 loss
|| || || || || || ||
The foreign exchange rate for the immediate delivery of currencies exchanged is called the -
|| || || || || || || || || || || || || || ||
✔✔spot rate ||
Norton Co., a U.S. corporation, sold inventory on December 1, with payment of 10,000 British
|| || || || || || || || || || || || || || ||
pounds to be received in sixty days. The pertinent exchange rates were as follows:
|| || || || || || || || || || || || ||
December 1 $1.7241 || ||
December 31 $1.8182 || ||
January 30 $1.6666 || ||
, 2
What amount of foreign exchange gain or loss should be recorded on January 30? - ✔✔$1,516
|| || || || || || || || || || || || || || || ||
loss
A U.S. company buys merchandise from a foreign company denominated in the foreign currency.
|| || || || || || || || || || || || || ||
Which of the following statements is true? - ✔✔If the foreign currency appreciates, a foreign
|| || || || || || || || || || || || || || ||
exchange loss will result. || || ||
On April 1, 20X1, Shannon Company, a U.S. company, borrowed 100,000 euros from a foreign
|| || || || || || || || || || || || || || ||
bank by signing a non interest-bearing note due April 1, 20X2. The dollar value of the loan was as
|| || || || || || || || || || || || || || || || || ||
follows:
||
April 1, 20X1 $97,000 || || ||
December 31, 20X1 $103,000 || || ||
April 1, 20X2 $105,000 || || ||
How much foreign exchange gain or loss should be included in Shannon's 20X2 income
|| || || || || || || || || || || || || ||
statement? - ✔✔$2,000 loss || || ||
Which one of the following relationships between fluctuations in exchange rates and foreign
|| || || || || || || || || || || || ||
exchange gains and losses is true? - ✔✔For an export sale, a gain results when foreign currency
|| || || || || || || || || || || || || || || || ||
appreciates
Norton Co., a U.S. corporation, sold inventory on December 1, with payment of 10,000 British
|| || || || || || || || || || || || || || ||
pounds to be received in sixty days. The pertinent exchange rates were as follows:
|| || || || || || || || || || || || ||
December 1$1.7241December 311.8182January 301.6666 || || ||
For what amount should Sales be credited on December 1? - ✔✔$17,241
|| || || || || || || || || || ||
Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment
|| || || || || || || || || || || || || ||
of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco's fiscal year-end.
|| || || || || || || || || || || || || || || || || ||
The pertinent exchange rates were as follows:
|| || || || || ||
May 8$1.25May 311.26June 61.20|| || ||
For what amount should Brisco's Accounts Payable be credited on May 8? - ✔✔$2,500,000
|| || || || || || || || || || || || ||
