Question

clark company, a u.s. corporation, sold inventory on december 1, 2024, with payment of 12,000 british pounds to be received in sixty days. the pertinent exchange rates were as follows: date spot rate december 1 $ 1.831 december 31 $ 1.976 january 30 $ 1.768 what amount of foreign exchange gain or loss should be recorded on january 30?

Answer 1

To calculate the foreign exchange gain or loss on January 30, we can compare the amount of British pounds received on December 1 to the amount received on January 30 and calculate the difference. Therefore, the foreign exchange loss recorded on January 30 is $5,215.18.

Step-by-step explanation:

To calculate the foreign exchange gain or loss, we need to determine the amount of British pounds received on January 30 and compare it to the amount of British pounds received on December 1.

On December 1, the payment was 12,000 British pounds and on January 30, the spot rate was $1.768. Therefore, the amount of British pounds received on January 30 can be calculated as:

12,000 British pounds / $1.768 = $6,784.82

To determine the foreign exchange gain or loss, we compare the amount of British pounds received on January 30 to the amount of British pounds received on December 1:

$6,784.82 - 12,000 British pounds = -5,215.18 British pounds

Therefore, the foreign exchange loss recorded on January 30 is $5,215.18.