On June 18,Wyman Company (a U.S.Company)sold merchandise to the Nielsen Company of Denmark for €60,000 (Euros),with a payment due in 60 days.If the exchange rate was $1.35 per euro on the date of sale and $1.14 per euro on the date of payment,Wyman Company should recognize a foreign exchange gain or loss in the amount of:
A)$60,000 gain.
B)$60,000 loss.
C)$68,400 loss.
D)$12,600 gain.
E)$12,600 loss.

Question

Quizplus · Accepted Answer

The first step is to convert the sale amount of €60,000 to US dollars using the exchange rate of $1.35 per euro, which gives us $81,000. The payment due in 60 days is then converted using the exchange rate of $1.14 per euro, giving us $68,400.

To determine the foreign exchange gain or loss, we need to compare the US dollar value of the payment to the US dollar value of the sale. The US dollar value of the payment ($68,400) is less than the US dollar value of the sale ($81,000), so Wyman Company has a foreign exchange loss.

The amount of the loss is calculated by subtracting the US dollar value of the payment from the US dollar value of the sale, which is $81,000 - $68,400 = $12,600. Since this is a loss for Wyman Company, the answer is E, $12,600 loss.

On June 18,Wyman Company (A U