Benjamin, Inc., operates an export/import business. The company has considerable

Question

Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country of Camerrand. The denomination of all transactions with these companies is alaries (AL), the Camerrand currency. During 2017, Benjamin acquires 20,000 widgets at a price of 8 alaries per widget. It will pay for them when it sells them. Currency exchange rates for 1 AL are as follows September 1, 2017 December 1, 2017 December 31, 2017 March 1, 2018 $ 0.46 0.44 0.48 0.45 a. Assume that Benjamin acquired the widgets on December 1, 2017, and made payment on March 1, 2018. What is the effect of the exchange rate fluctuations on reported income in 2017 and in 2018? the exchange rate fluctuations on reported income in 2017? exchange rate fluctuations on reported income in 2017 and in 2018? b. Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on December 1, 2017. What is the effect of c. Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on March 1, 2018. What is the effect of the (Input all amounts as positive values.) Effect of Exchange Rate Fluctuations a. 2017 2018 b.2017 C. 2017 2018

Explanation / Answer

6,400

=160000*(.48-.44)

= 6400

4,800

= [(70400+6400) - (160000*.45)]

= 76800 - 72000

= 4800

3200

= 73,600 - 70400

= 3200

4800

= 76800 - 72000

= 4800

12/1/2017 Inventory 70,400

Accounts Payable (AL)(70,400)

12/31/2017 Foreign Exchange Loss 6,400 160000*(.48-.44)

Accounts Payable (AL) (6,400)

3/1/2018 Accounts Payable (AL)76,800 (70400)+(6400)

Cash (72,000) 160000*.45

Foreign Exchange Gain 4,800

2.

Date of Sale Inventory73,600

Accounts Payable (AL)(73,600)

Date of Collection Accounts Payable (AL) 73,600

Cash(70,400)

Foreign Exchange Gain(3,200)

3.

12/31/2017 Foreign Exchange Loss 3,200

Accounts Payable (AL) (3,200)

3/1/2018 Accounts Payable (AL) 76,800

Cash(72,000)

Foreign Exchange Gain(4,800)

Effect of Exchange Rate fluctuations a. 2017 Foreign Exchange Loss

6,400

=160000*(.48-.44)

= 6400

2018 Foreign Exchange Gain

4,800

= [(70400+6400) - (160000*.45)]

= 76800 - 72000

= 4800

b 2017 Foreign Exchange Gain

3200

= 73,600 - 70400

= 3200

c. 2017 Foreign Exchange Loss 3200 2018 Foreign Exchange Gain

4800

= 76800 - 72000

= 4800

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.