ACCT 495 Advanced Accounting Midterm Exam

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ACCT 495 Advanced Accounting Midterm Exam Midterm Exam Advanced Accounting (30 questions x 9 points each=270)
1. Pigskin Co., a U.S. corporation, sold inventory on credit to a British company on April 8, 2011. Pigskin received payment of 35,000 British pounds on May 8, 2011. The exchange rate was £1 = $1.54 on April 8 and £1 = 1.43 on May 8. What amount of foreign exchange gain or loss should be recognized? (round to the nearest dollar)
A. $10,500 loss
B. $10,500 gain
C. $1,750 loss
D. $3,850 loss
E. No gain or loss should be recognized. Use the following information for questions 2 and 3
Norton Co., a U.S. corporation, sold inventory on December 1, 2011, with payment of 10,000 British pounds to be received in sixty days. The pertinent exchange rates were as follows: 2. For what amount should Sales be credited on December 1?
A. $5,500.
B. $16,949.
C. $18,182.
D. $17,241.
E. $16,667.
3. What amount of foreign exchange gain or loss should be recorded on December 31?
A. $300 gain.
B. $300 loss.
C. $0.
D. $941 loss.
E. $941 gain.
Use the following information for questions 4-6
Brisco Bricks purchases raw material from its foreign supplier, Bolivian Clay, on May 8. Payment of 2,000,000 foreign currency units (FC) is due in 30 days. May 31 is Brisco’s fiscal year-end. The pertinent exchange rates were as follows:
4. For what amount should Brisco’s Accounts Payable be credited on May 8?
A. $2,500,000.
B. $2,440,000.
C. $1,600,000.
D. $1,639,344.
E. $1,666,667. 5. How much Foreign Exchange Gain or Loss should Brisco record on May 31?
A. $2,520,000 gain.
B. $20,000 gain.
C. $20,000 loss.
D. $80,000 gain.
E. $80,000 loss. 6. How much US $ will it cost Brisco to finally pay the payable on June 7?