Barter Corp.sold American telecommunications equipment to a British company for 650,000 pounds.On the sale date,the exchange rate was $1.65 per British pound,but when Barter received payment from its customer,the exchange rate was $1.60 per pound.When the foreign receivable was collected,Barter Enterprises:

Question

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Barter Corp. made a sale of 650,000 pounds at an exchange rate of $1.65 per pound on the sale date. Therefore, the revenue from this sale was:

650,000 pounds x $1.65/pound = $1,072,500

However, when Barter received payment from the customer, the exchange rate had changed to $1.60 per pound. Therefore, the actual cash received from the customer was:

650,000 pounds x $1.60/pound = $1,040,000

The difference between the revenue and the actual cash received represents a loss on fluctuation of foreign currency, which is calculated as:

$1,072,500 - $1,040,000 = $32,500 (loss)

Therefore, the correct answer is D, which debits the Loss on Fluctuation of Foreign Currency for $32,500.