Assume that Barun agrees to purchase US$500,000 for C$550,000 on January 15,2018.The exchange rate at year-end is US$1 = C$0.95 and the January 15,2018 exchange rate is US$1 = C$0.97.What journal entry is required at Jan 15,2018?
A) $10,000 gain.
B) $10,000 loss.
C) $75,000 gain.
D) $75,000 loss.

Question

Quizplus · Accepted Answer

A)
At Jan 15, 2013: 500 ∗ .97 = 485k
At year-end: 500 ∗ .95 = 475
Change is 485 - 475 = 10,000 gain

Assume That Barun Agrees to Purchase US$500,000 for C$550,000 on January