Assume That MAK Agrees to Purchase US$500,000 for C$550,000 on January

question 104

Multiple Choice

Assume that MAK agrees to purchase US$500,000 for C$550,000 on January 15,2018.The exchange rate at year-end is US$1 = C$0.95 and the January 15,2018 exchange rate is US$1 = C$0.97.What journal entry is required at year-end?

• A) 0
• B) $65,000 loss.
• C) $75,000 gain.
• D) $75,000 loss.

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Definitions:

Factory Overhead

Factory overhead encompasses all indirect costs associated with the manufacturing process, including utilities, maintenance, and management salaries.

Amortization

The periodic transfer of the cost of an intangible asset to expense or of a bond discount to interest expense.

Prime Cost

The direct costs of manufacturing a product, which include the raw materials and direct labor expenses.

Plant Janitor's Wages

The wages paid to janitorial staff within a manufacturing plant, considered part of factory overhead costs.