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Winston Corp., a U.S. company, had the following foreign currency transactions during 2011:
(1.) Purchased merchandise from a foreign supplier on July 16, 2011 for the U.S. dollar equivalent of $47,000 and paid the invoice on August 3, 2011 at the U.S. dollar equivalent of $54,000.
(2.) On October 15, 2011 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-bearing note payable in euros on October 15, 2011. The U.S. dollar equivalent of the note amount was $295,000 on December 31, 2011, and $299,000 on October 15, 2012.
-What amount should be included as a foreign exchange gain or loss from the two transactions for 2011?
Net Profit
The amount of income that remains after subtracting all expenses, taxes, and costs from total revenue.
Monetary Items
Assets and liabilities that are to be received or paid in a fixed or determinable amount of money.
Payables
Amounts that a company owes to its creditors or suppliers for goods or services received.
Borrowings
Funds that a company or individual takes on loan from another party, to be repaid over time with interest.
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