Flynn Corporation Purchased Bicycles from a British Manufacturer at a Price

question 48

Multiple Choice

Flynn Corporation purchased bicycles from a British manufacturer at a price of 45,000 British pounds on November 15,2017 with payment due in 60 days.Using the following exchange rates,what gain or loss from currency fluctuations should be recognized in 2017 and 2018,respectively? Nov.15,2017 $1.70 per British pound
Dec.31,2017 $1.75 per British pound
Jan.15,2018 $1.73 per British pound

• A)A $2,250 loss in 2017 and a $900 gain in 2018.
• B)No gain or loss in 2017 and a $1,350 loss in 2018.
• C)A $2,250 gain in 2017 and a $900 loss in 2018.
• D)No gain or loss in 2017 and a $1,350 gain in 2018.

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Definitions:

Market Prices

The actual selling price of goods and services in a marketplace, determined by supply and demand dynamics.

Voluntary Exchange

An economic transaction where all parties involved agree to the trade, believing they will benefit from the exchange.

Relative Scarcity

The economic concept referring to the limited availability of resources in comparison to the unlimited wants and needs of consumers.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, creating a market balance.