On July 1, 2020, CANCO Purchased Inventory from Its Main

question 5

Multiple Choice

On July 1, 2020, CANCO purchased inventory from its main U.S. supplier, RNB Enterprises, at a cost of US$12,000. CANCO's year end is on July 31. Payment of US$12,000 for the inventory is due on August 31, 2020. Some important dates regarding this transaction, as well as the exchange rates in effect at each of these dates are shown below:
$$\begin{array} { | l | l | } \hline \text { Tarsaction date: July } 1,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.370 \\\hline\text { Year end July } 31,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.345 \\\hline \text { Setternent date: August } 31,2020 : & \text { 1 U.S. Dollar } = \text { CDN } \$ 1.325 \\\hline\end{array}$$ What was the amount in Canadian dollars paid by CANCO to RNB on the settlement date?

• A) CDN$15,900
• B) CDN$16,440
• C) CDN$16,140
• D) CDN$12,000

---

Definitions:

Adjusting Entry

An accounting record entry, created at the conclusion of an accounting cycle, that distributes earnings and expenses to their respective years.

Unearned Fees

Income received by a company for services to be provided in the future; recognized as a liability until the services are rendered.

Adjusting Entry

A financial record created at the conclusion of an accounting cycle to distribute income and costs to the timeframe in which they were genuinely incurred.

Office Equipment

Tangible assets such as computers, desks, and chairs, purchased for use in the conduct of business operations and not intended for resale.