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Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country...
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 $0.46 December 1, 2017 0.44 December 31, 2017 0.48 March 1, 2018 0.45 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? Assume that Benjamin acquired the widgets on September 1, 2017, and made payment on December 1, 2017. What is the effect of the exchange rate fluctuations on reported income in 2017? Assume that Benjamin acquired the widgets on September 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?
Solutions
Expert Solution
| Widgets | 20000 | |||||
| Price | 8 AL / Widgets | |||||
| Currency Exchange Rates | ||||||
| 1-Sep-17 | 1 AL | $0.46 | ||||
| 1-Dec-17 | 1 AL | $0.44 | ||||
| 31-Dec-17 | 1 AL | $0.48 | ||||
| 1-Mar-18 | 1 AL | $0.45 | ||||
| IF 1 Dec 2017 Buy and 1 March 2018 payment | ||||||
| Purchase cost | 8*.44*20000 | $ 70,400 | ||||
| Payable | $ 70,400 | |||||
| Treatment on 31 Dec | 8*.48*20000 | $ 76,800 | ||||
| Unrealized Exchange Loss in 2017 | 76800 - 70400 | $ 6,400 | ||||
| Payment | 8*.45*20000 | $ 72,000 | ||||
| Exchange Gain | 72000-76800 | $ 4,800 | ||||
| Net Exchange Loss in 2018 | $ 6400 - $ 4800 | $ 1,600 | ||||
| IF 1 Sec 2017 Buy and 1 Dec 2017 payment | ||||||
| Purchase cost | 8*.46*20000 | $ 73,600 | ||||
| Payable | $ 73,600 | |||||
| Payment | 8*.44*20000 | $ 70,400 | ||||
| Exchange Gain in 2017 | 73600-70400 | $ 3,200 | ||||
| IF 1 Sec 2017 Buy and 1 Mar 2018 payment | ||||||
| Purchase cost | 8*.46*20000 | $ 73,600 | ||||
| Payable | $ 73,600 | |||||
| Treatment on 31 Dec | 8*.48*20000 | $ 76,800 | ||||
| Unrealized Exchange Loss in 2017 | 76800 - 73600 | $ 3,200 | ||||
| Payment | 8*.45*20000 | $ 72,000 | ||||
| Exchange Gain | 72000-76800 | $ 4,800 | ||||
| Net Exchange Gain in 2018 | $ 4800 -$ 3200 | $ 1,600 | ||||
ekkarill92 answered 1 year agoRelated Solutions
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country...
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 39,000 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
$
0.47
December 1, 2017
0.43
December 31, 2017
0.49
March 1, 2018...
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country...
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 45,000 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
$
0.48
December 1, 2017
0.42
December 31, 2017
0.50
March 1, 2018...
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country...
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 2015,
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,
2015
$
0.46
December 1,
2015
0.44
December 31,
2015
0.48
March 1, 2016...
Benjamin, Inc., operates an export/import business. The company has considerable dealings with companies in the country...
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 22,000 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
$
0.48
December 1, 2017
0.42
December 31, 2017
0.50
March 1, 2018...
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Note: Please do not copy paste plagiarism is
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