Matthias Corp. had the following foreign currency transactions during 2020: Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $63,200 and paid the invoice on April 20 at the U.S. dollar equivalent of $51,400.On September 1, borrowed the U.S. dollar equivalent of $304,000 evidenced by a note that is payable in the lender's local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $326,000. In Matthias’s 2020 income statement, what amount should be included as a net foreign exchange gain or loss?Multiple Choice $10,200 loss $22,000 gain $33,800 loss $11,800 gain

Gain on payment of merchandise purchased = Amount paid on April 20 - Value on January 20 = 51,400 - 63,200 = $11,800Loss on money borrowed = U.S. dollar equivalent of the principal on December 31 - U.S. dollar equivalent of the principal on September 1 = $326,000 - 304,000 = $22,000 Gain (loss) included as a net foreign exchange gain or loss = Gain on payment of merchandise purchased + Loss on money borrowed = 11800 + (-22000) = ($10,200) $10,200 loss is the correct answer.

Answered: Matthias Corp. had the following…

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Matthias Corp. had the following foreign currency transactions during 2020:

Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $63,200 and paid the invoice on April 20 at the U.S. dollar equivalent of $51,400.
On September 1, borrowed the U.S. dollar equivalent of $304,000 evidenced by a note that is payable in the lender's local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $326,000.

In Matthias’s 2020 income statement, what amount should be included as a net foreign exchange gain or loss?

Multiple Choice

$10,200 loss
$22,000 gain
$33,800 loss
$11,800 gain

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