Norton Co, a U What Amount of Foreign Exchange Gain or Loss Should Be

question 84

Multiple Choice

Norton Co., a U.S. corporation, sold inventory on December 1, 2013, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: $$\begin{array} { | l | l | l | } \hline \text { Dec 1 } & \text { Spot rate: } & \$ 1.7241 \\\hline \text { Dec. 31 } & \text { Spot rate: } & \$ 1.8182 \\\hline \text { Jan. 30 } & \text { Spot rate: } & \$ 1.6666 \\\hline\end{array}$$ What amount of foreign exchange gain or loss should be recorded on December 31?

• A)$300 gain.
• B)$300 loss.
• C)$0.
• D)$941 loss.
• E)$941 gain.

---

Definitions:

Proportional Tax

A proportional tax is a tax system where the tax rate remains constant regardless of the amount subject to taxation, meaning individuals pay the same percentage of their income regardless of income level.

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases, disproportionately affecting those with lower income.

Average Tax Rate

The ratio of total taxes paid to the total taxable income, reflecting the percentage of income that goes to taxes.

Tax-Free

Earnings or financial transactions that are exempt from taxation by the government.