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On Sept. 1, 20x7, Ben & Ben Co. sold merchandise to a foreign firm for ¥250,000.

Terms of the
sale require payment in yen on Feb. 1, 20x8. On Sept. 1, 20x7, the spot exchange rate was P1.20
per yen. At Dec. 31, 20x7, Ben & Ben’s year-end, the spot rate was P1.19, but the rate increased
to P1.22 by Feb. 1, 20x8, when payment was received. How much should Ben & Ben report as
foreign exchange transaction gain or loss in its 20x8 income statement?
A: P7,500
B: P5,000
C: (P2,500)
D: -0-

Cindy Corp. bought inventory items from a foreign supplier in Japan on Nov. 15, 20x7 for
100,000 yen, when the spot rate was P0.4295. At Cindy’s December 31, 20x7, year end, the
spot rate was P0.4245. On Jan. 15, 20x8, Cindy bought 100,000 yen at the spot rate of P0.4345
and paid the invoice. How much should Cindy report in its income statements for 20x7 and
20x8 as FOREX gain or loss?
A: P500; (P1,000)
B: (P500); P1,000
C: P1,000; (P500)
D: (P1,000); P500