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

question 15

Multiple Choice

Use the following information to answer the question(s) below.
On October 4,2010,Sooty Corporation borrowed 250,000 British pounds from a London bank,evidenced by an interest-bearing note payable due in one year.The note was payable in pounds.Exchange rates for pounds were:

-What exchange gain or loss appeared on Sooty's 2011 income statement?

• A)a loss of $15,000
• B)a loss of $5,000
• C)a gain of $15,000
• D)a gain of $5,000

---

Definitions:

Income Summary

An account used in closing process to collect all revenue and expense account balances before determining net income or loss.

Debit Balance

The condition where the total debits exceed the total credits in an account, typically indicating assets or expenses.

Credit Balance

A balance in a financial account that indicates the amount of money owed to a creditor or the account holder; it is the opposite of a debit balance.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances from temporary accounts to permanent accounts, preparing the books for the next period.