Norton Co., a U.S. corporation, sold inventory on December 1, 2013, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: $$\begin{array} { | l | l | l | }
\hline \text { Dec 1 } & \text { Spot rate: } & \$ 1.7241 \
\hline \text { Dec. 31 } & \text { Spot rate: } & \$ 1.8182 \
\hline \text { Jan. 30 } & \text { Spot rate: } & \$ 1.6666 \
\hline
\end{array}$$ For what amount should Sales be credited on December 1?

Question

Norton Co., a U.S. corporation, sold inventory on December 1, 2013, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: $$\begin{array} { | l | l | l | } 
\hline \text { Dec 1 } & \text { Spot rate: } & \$ 1.7241 \
\hline \text { Dec. 31 } & \text { Spot rate: } & \$ 1.8182 \
\hline \text { Jan. 30 } & \text { Spot rate: } & \$ 1.6666 \
\hline
\end{array}$$ For what amount should Sales be credited on December 1?

Quizplus · Accepted Answer

Sales should be credited at the spot rate on the date of the transaction, which is December 1. The spot rate on December 1 is $1.7241 per British pound. Therefore, the sales amount is 10,000 pounds * $1.7241 = $17,241.

Norton Co, a U For What Amount Should Sales Be Credited on December 1