Parker Corp

question 20

Multiple Choice

Parker Corp., a U.S. company, had the following foreign currency transactions during 2011: (1.) Purchased merchandise from a foreign supplier on July 5, 2011 for the U.S. dollar equivalent of $80,000 and paid the invoice on August 3, 2011 at the U.S. dollar equivalent of $82,000.
(2) ) On October 1, 2011 borrowed the U.S. dollar equivalent of $872,000 evidenced by a non-interest-bearing note payable in euros on October 1, 2011. The U.S. dollar equivalent of the note amount was $860,000 on December 31, 2011, and $881,000 on October 1, 2012.
What amount should be included as a foreign exchange gain or loss from the two transactions for 2012?

• A) $9,000 loss.
• B) $9,000 gain.
• C) $11,000 loss.
• D) $21,000 loss.
• E) $21,000 gain.

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Definitions:

Sample Mean

The average value of a set of observations or measurements taken from a sample.

Standard Error

A statistic that measures the variability or spread of sampling distribution means.

Sample Size

The quantity of measurements or repetitions contained within a statistical sample.

Statistical Variation

The measure of how much data values in a statistical set differ from the average or mean value.