Assume that Aero agrees to purchase US$50,000 for C$52,000 on January 15,2018.The exchange rate at year-end is US$1 = C$0.98 and the January 15,2018 exchange rate is US$1 = C$0.97.What journal entry is required at Jan 15,2013?
A) $500 loss.
B) $500 gain.
C) $3,500 loss.
D) $3,500 gain.

Question

Quizplus · Accepted Answer

A)
At year-end: (50,000 × 0.98) = 49,000
At Jan 15 2013: 50,000 × 0.97 = 48,500
Change is 49,000 - 48,500 = 500 loss

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