Assume That Lewis International Sells Running Shoes to a British

question 1

Multiple Choice

Assume that Lewis International sells running shoes to a British importer on June 1 and that the sale is denominated at £75,000 and will be collected on July 15. Assume the treatment of FASB Statement 52 and that no forward contract is entered into. Also assume that Lewis closes its books at the end of each month. The following are the relevant exchange rates.
$\begin{array}{ll}\text { Spot rate on June 1 } & \$ 1.6200 \\ \text { Forward rate for July } & \\ 15 \text { delivery } & \$ 1.6000 \\ \text { Spot rate on June 30 } & \$ 1.6100 \\ \text { Spot rate on July 15 } & \$ 1.5950\end{array}$
-Assuming the tax treatment for foreign currency transactions, what is the foreign exchange gain or loss on July 15?

• A) $1875 loss
• B) $1125 loss
• C) $ 375 loss
• D) $ 750 loss
• E) gain or loss is deferred

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Definitions:

Secure Transactions

Financial or data exchanges that are protected against fraud, theft, or unauthorized access through various security measures.

Lists

Inventories or records in a software or system, detailing items, accounts, or data for easy access and management.

Paycheck Style

Refers to the format or template used to present details on an employee's paycheck, such as earnings, deductions, and net pay.

Electronic

Relating to technology that operates on the principles of electronics; typically involves devices that utilize electrical power to function.