Mills Inc Had a Receivable from a Foreign Customer That Is

question 37

Multiple Choice

Mills Inc. had a receivable from a foreign customer that is due in the local currency of the customer (stickles) . On December 31, 2012, this receivable for §200,000 was correctly included in Mills' balance sheet at $132,000. When the receivable was collected on February 15, 2013, the U.S. dollar equivalent was $144,000. In Mills' 2013 consolidated income statement, how much should have been reported as a foreign exchange gain?

• A) $0.
• B) $36,000.
• C) $48,000.
• D) $10,000.
• E) $12,000.

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Definitions:

Equity

The value of ownership interest in the firm, calculated as total assets minus total liabilities.

Account Payable

Liabilities of a company that are owed to creditors or suppliers for purchases made on credit.

Suppliers

They are businesses or individuals that provide the goods or services that companies need to operate and produce their own goods.

Internal User

An internal user is an individual within an organization, such as managers and employees, who uses the financial information to make decisions regarding the operations of the company.