Kim Manufacturing purchased on credit £20,000 worth of parts from a British company when the exchange rate was $1.66 per British pound. At the year-end balance sheet date, the exchange rate increased to $1.69. Kim must record a gain of $600.

Question

Quizplus · Accepted Answer

Kim Manufacturing would record a loss, not a gain, because the cost in dollars increased due to the exchange rate change from $1.66 to $1.69 per British pound.

Kim Manufacturing Purchased on Credit £20,000 Worth of Parts from a British