An American company makes a credit sale of goods to a company in London for 20,000 British pounds.On the date of sale,the exchange rate was $1.60 per pound.However,on the date payment was received,the exchange rate had risen to $1.70 per pound.As a result,the American company would record

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The American company would record an exchange gain of $2,000 because on the date of sale, the value of the sale in USD was 20,000 pounds * $1.60/pound = $32,000. When the payment was received, the value in USD was 20,000 pounds * $1.70/pound = $34,000. The difference ($34,000 - $32,000) is a gain of $2,000.

An American Company Makes a Credit Sale of Goods to a Company