Kline Inc. purchases goods for 5,000 pounds on October 31, Year 1. The company pays for the goods three months later. The exchange rates are as follows: Exchange Rate Date Oct. 31, Yr. 1 Dec. 31, Yr. 1 Jan. 31, Yr. 2 $0.63 $0.75 $0.63 As a result of the movements in the exchange rates shown above, Kline will book: O A gain on January 31, Year 2. A loss on January 31, Year 2. No gain or loss on December 31, Year 1. No gain or loss on January 31, Year 2.

Kline Inc. purchases goods for 5,000 pounds on October 31, Year 1. The company pays for the goods three months later. The exchange rates are as follows: Exchange Rate Date Oct. 31, Yr. 1 Dec. 31, Yr. 1 Jan. 31, Yr. 2 $0.63 $0.75 $0.63 As a result of the movements in the exchange rates shown above, Kline will book: O A gain on January 31, Year 2. A loss on January 31, Year 2. No gain or loss on December 31, Year 1. No gain or loss on January 31, Year 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Kline Inc. purchases goods for 5,000 pounds on October 31, Year 1. The company pays for the goods three months later. The
exchange rates are as follows:
Exchange Rate
Date
Oct. 31, Yr. 1
Dec. 31, Yr. 1
Jan. 31, Yr. 2
$0.63
$0.75
$0.63
As a result of the movements in the exchange rates shown above, Kline will book:
O A gain on January 31, Year 2.
O A loss on January 31, Year 2.
O No gain or loss on December 31, Year 1.
O No gain or loss on January 31, Year 2.

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