Parker Corp., a U.S. company, had the following foreign currency transactions during 2013:
(1)) Purchased merchandise from a foreign supplier on July 5, 2013 for the U.S. dollar equivalent of $80,000 and paid the invoice on August 3, 2013 at the U.S. dollar equivalent of $82,000.
(2)) On October 1, 2013 borrowed the U.S. dollar equivalent of $872,000 evidenced by a non-interest-bearing note payable in euros on October 1, 2013. The U.S. dollar equivalent of the note amount was $860,000 on December 31, 2013, and $881,000 on October 1, 2014.
What amount should be included as a foreign exchange gain or loss from the two transactions for 2013?
A) $2,000 loss.
B) $2,000 gain.
C) $10,000 gain.
D) $14,000 loss.
E) $14,000 gain.

Question

Quizplus · Accepted Answer

[$80,000 - $82,000 = ($2,000) Loss] + [$872,000 - $860,000 = $12,000 Gain] = $10,000 Gain