Parker Corp., a U.S. company, had the following foreign currency transactions during 2021: (1) Purchased merchandise from a foreign supplier on July 5, 2021 for the U.S. dollar equivalent of $80,000 and paid the invoice on August 3, 2021 at the U.S. dollar equivalent of $82,000. (2.) On October 1, 2021 borrowed the U.S. dollar equivalent of $872,000 evidenced by a non-interest-bearing note payable in euros on October 1, 2022. The U.S. dollar equivalent of the note amount was $860,000 on December 31, 2021, and $881,000 on October 1, 2022. What amount should be included as a foreign exchange gain or loss from the two transactions for 2022?
Parker Corp., a U.S. company, had the following foreign currency transactions during 2021: (1) Purchased merchandise from a foreign supplier on July 5, 2021 for the U.S. dollar equivalent of $80,000 and paid the invoice on August 3, 2021 at the U.S. dollar equivalent of $82,000. (2.) On October 1, 2021 borrowed the U.S. dollar equivalent of $872,000 evidenced by a non-interest-bearing note payable in euros on October 1, 2022. The U.S. dollar equivalent of the note amount was $860,000 on December 31, 2021, and $881,000 on October 1, 2022. What amount should be included as a foreign exchange gain or loss from the two transactions for 2022?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Parker Corp., a U.S. company, had the following foreign currency transactions during 2021:
(1.) Purchased merchandise from a foreign supplier on July 5, 2021 for the U.S. dollar equivalent of $80,000 and paid the invoice on August 3, 2021 at the
U.S. dollar equivalent of $82,000.
(2.) On October 1, 2021 borrowed the U.S. dollar equivalent of $872,000 evidenced by a non-interest-bearing note payable in euros on October 1, 2022.
The U.S. dollar equivalent of the note amount was $860,000 on December 31, 2021, and $881,000 on October 1, 2022.
What amount should be included as a foreign exchange gain or loss from the two transactions for 2022?
Multiple Choice
$21,000 loss.
$9,000 gain.
$9,000 loss.
$21,000 gain
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