Winston Corp

question 91

Multiple Choice

Winston Corp., a U.S. company, had the following foreign currency transactions during 2021:(1.) Purchased merchandise from a foreign supplier on July 16, 2021 for the U.S. dollar equivalent of $47,000 and paid the invoice on August 3, 2021 at the U.S. dollar equivalent of $54,000.(2.) On October 15, 2021 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-bearing note payable in euros on October 15, 2022. The U.S. dollar equivalent of the note amount was $295,000 on December 31, 2021, and $299,000 on October 15, 2022.What amount should be included as a foreign exchange gain or loss from the two transactions for 2022?

• A) $1,000 loss.
• B) $1,000 gain.
• C) $2,000 loss.
• D) $4,000 gain.
• E) $4,000 loss.

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Definitions:

Increases

A rise in magnitude, quantity, or value of something.

Negative Correlation

A bond between two variables in which the elevation of one corresponds with the reduction of the other.

Increases

A term indicating a rise or growth in quantity, size, number, or extent.

Negative Correlation

A dynamic between two variables where an increase in one leads to a decrease in the other.