Assume That Aero Agrees to Purchase US$50,000 for C$52,000 on January

question 87

Multiple Choice

Assume that Aero agrees to purchase US$50,000 for C$52,000 on January 15,2013.The exchange rate at year end is US$1 = C$0.98 and the January 15,2013 exchange rate is US$1 = C$0.97.What journal entry is required at year end?

• A)$3,000 loss.
• B)$3,000 gain.
• C)$3,500 loss.
• D)$3,500 gain.

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Definitions:

Insurance Premium

The amount paid for an insurance policy, typically charged monthly or annually, for the duration of the policy.

Note Payable

A written promise to pay a specific amount of money, either on demand or at a set future date, typically evidenced by a formal legal document.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made for accruals, deferrals, and other adjustments, used in the preparation of financial statements.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.