Use the Following Information to Answer the Question(s)below

question 19

Multiple Choice

Use the following information to answer the question(s) below.
On November 1,2010,Rolleks Corporation sold merchandise to Watchem Corporation,a Swiss firm.Rolleks measured and recorded the account receivable from the sale at $107,100.Watchem paid for this account on November 30,2010.Spot rates for Swiss francs on November 1 and November 30,respectively,were $1.05 and $1.02.
-On December 5,2010,Unca Corporation,a U.S.firm,bought inventory items from Skagerrak Corporation of Norway for 1,000,000 Norwegian kroner when the spot rate for kroner was $0.166.The purchase was denominated in kroner.At Unca's fiscal year end,December 31,2010,the spot rate was $0.171.On January 4,2011,Unca purchased 1,000,000 kroner for $167,500 and paid the invoice.How much gain or (loss) did Unca report in its 2010 and 2011 income statements,respectively?

• A)$(5,000)and $1,500
• B)$0 and ($1,500)
• C)($5,000)and $3,500
• D)$0 and ($3,500)

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Definitions:

Mass Services Entities

Companies or organizations that deliver standardized services to a large number of customers, focusing on efficiency and high volume.

Merchandising Entities

Companies that purchase goods at wholesale prices and sell them at retail prices, making a profit from the markup.

Cost of Goods

The total expense incurred to produce products sold by a company, including direct materials, direct labor, and manufacturing overheads.

Front Office

The part of a company that deals directly with customers, providing services, support, and interaction with clients and visitors.