Parker Corp., a U.S. company, had the following foreign currency transactions during 2013:
(1)) Purchased merchandise from a foreign supplier on July 5, 2013 for the U.S. dollar equivalent of $80,000 and paid the invoice on August 3, 2013 at the U.S. dollar equivalent of $82,000.
(2)) On October 1, 2013 borrowed the U.S. dollar equivalent of $872,000 evidenced by a non-interest-bearing note payable in euros on October 1, 2013. The U.S. dollar equivalent of the note amount was $860,000 on December 31, 2013, and $881,000 on October 1, 2014.
What amount should be included as a foreign exchange gain or loss from the two transactions for 2014?
A) $9,000 loss.
B) $9,000 gain.
C) $11,000 loss.
D) $21,000 loss.
E) $21,000 gain.

Question

Quizplus · Accepted Answer

$860,000 - $881,000 = ($21,000) Loss