Flynn Corporation purchased bicycles from a British manufacturer at a price of 4
ID: 2399151 • Letter: F
Question
Flynn Corporation purchased bicycles from a British manufacturer at a price of 41,000 British pounds on November 15, 2017 with payment due in 60 days. Using the following exchange rates, what gain or loss from currency fluctuations should be recognized in 2017 and 2018, respectively? Nov. 15, 2017 $1.70 per British pound Dec. 31, 2017 $1.75 per British pound Jan. 15, 2018 $1.73 per British pound Multiple Choice
A. No gain or loss in 2017 and a $1,230 loss in 2018.
B. A $2,050 gain in 2017 and a $820 loss in 2018.
C. No gain or loss in 2017 and a $1,230 gain in 2018.
D. A $2,050 loss in 2017 and a $820 gain in 2018.
Explanation / Answer
Solution : D A $2,050 loss in 2017 and a $820 gain in 2018.
Working:
Loss in 2017 = ($1.75 - $1.70) x 41,000 = $2,050
gain in 2018 ($1.75 - $1.73) x 41,000 = $820