On August 1, Steffen Computers, Inc. purchased thirty computer chips, on account, from a company located in Taiwan for 530,000 Taiwan dollars. On that date the Taiwan dollar is worth $0.034. On September 1, when the Taiwan dollar was worth $0.036, payment was made. The journal entry on September 1 by Steffen Computers, Inc. would include a: (Round your final answer to the nearest dollar.)
A)debit to Accounts Payable $19,080.
B)debit to Foreign-Currency Transaction Loss -$1060.
C)credit to Foreign-Currency Transaction Gain -$1060.
D)credit to Cash $18,020.

Question

Quizplus · Accepted Answer

The correct answer is C. On September 1, when the Taiwan dollar was worth $0.036, payment was made. The journal entry on September 1 by Steffen Computers, Inc. would include a credit to Foreign-Currency Transaction Gain of $1060.