Assume that Aero agrees to purchase US$50,000 for C$52,000 on January 15,2013.The exchange rate at year end is US$1 = C$0.98 and the January 15,2013 exchange rate is US$1 = C$0.97.What journal entry is required at year end?
A)$3,000 loss.
B)$3,000 gain.
C)$3,500 loss.
D)$3,500 gain.

Question

Quizplus · Accepted Answer

The exchange rate changed from 0.97 to 0.98, resulting in a loss. The calculation is (50,000 * 0.98) - 52,000 = -3,000, indicating a $3,000 loss.

Assume That Aero Agrees to Purchase US$50,000 for C$52,000 on January