On July 1, 2017, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2018. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows: Date AmountJuly 1, 2017 (date borrowed) $225,000December 31, 2017 (Mifflin’s year-end) 220,000 July 1, 2018 (date repaid) 210,000 In its 2018 income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note? Choose the correct.a. $15,000 gainb. $15,000 lossc. $10,000 gaind. $10,000 loss

On July 1, 2017, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2018. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows: Date AmountJuly 1, 2017 (date borrowed) $225,000December 31, 2017 (Mifflin’s year-end) 220,000 July 1, 2018 (date repaid) 210,000 In its 2018 income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note? Choose the correct.a. $15,000 gainb. $15,000 lossc. $10,000 gaind. $10,000 loss

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 5QE

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On July 1, 2017, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2018. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows: Date Amount July 1, 2017 (date borrowed) $ 225,000 December 31, 2017 (Mifflin's year-end) 220,000 July 1, 2018 (date repaid) 210,000 In its 2018 income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note?$10,000 gain$10,000 loss$15,000 loss$15,000 gain
On July 1, 2017, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2018. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows:In its 2018 income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note?a. $15,000 gainb. $15,000 lossc. $10,000 gaind. $10,000 loss
Matthias Corp. had the following foreign currency transactions during 2017:• Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $60,000 and paid the invoice on April 20 at the U.S. dollar equivalent of $50,000.• On September 1, borrowed the U.S. dollar equivalent of $300,000 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 $320,000.In Matthias’s 2017 income statement, what amount should be included as a net foreign exchange gain or loss?a. $10,000 gainb. $10,000 lossc. $20,000 gaind. $30,000 loss
On April 1, 2017, Mendoza Company borrowed 514,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2017, and will make a second interest payment on March 31, 2018, when the loan is repaid. Mendoza prepares U.S.-dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro: April 1, 2017 $ 1.10 October 1, 2017 1.20 December 31, 2017 1.24 March 31, 2018 1.28 Prepare all journal entries 1 Record the borrowal of the foreign loan. 2 Record the first interest payment on the foreign loan. 3 Record the year-end interest accrual on the foreign loan. 4 Record the year-end adjustment to the foreign loan. 5 Record the second interest payment and foreign exchange loss/gain. 6 Record the repayment of the loan and foreign exchange loss/gain.
On April 1, 2017, Mendoza Company borrowed 508,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2017 and will make a second interest payment on March 31, 2018 when the loan is repaid. Mendoza prepares U.S.-dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro: April 1, 2017 $ 1.10 October 1, 2017 1.20 December 31, 2017 1.24 March 31, 2018 1.28
On April 1, 2017, Mendoza Company borrowed 500,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2017, and will make a second interest payment on March 31, 2018, when the loan is repaid. Mendoza prepares U.S.-dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro:
Brief, Inc., had a receivable from a foreign customer that is payable in the customer's local currency. On December 31, 2017, Brief correctly included this receivable for 200,000 local currency units (LCU) in its balance sheet at $110,000. When Brief collected the receivable on February 15, 2018, the U.S. dollar equivalent was $120,000. In Brief's 2018 consolidated income statement, how much should it report as a foreign exchange gain?$25,000$15,000$10,000$0
Pangasinan Company is a dealer in equipment. On December 31, 2017, the entity sold an equipment in exchange for a non-interest bearing note requiring five annual payments of P500,000. The first payment was made on December 31, 2018.The market interest for similar notes was 8%. The PV of 1 at 8% for 5 periods is .68 and the PV of an ordinary annuity of 1 at 8% for 5 periods is 3.99.On December 31, 2017, what is the carrying amount of the note receivable?
Choose the correct.Matthias Corp. had the following foreign currency transactions during 2017:∙ Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $60,000 and paid the invoice on April 20 at the U.S. dollar equivalent of $50,000.∙ On September 1, borrowed the U.S. dollar equivalent of $300,000 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 $320,000.In Matthias’s 2017 income statement, what amount should be included as a net foreign exchange gain or loss?a. $10,000 gainb. $10,000 lossc. $20,000 gaind. $30,000 loss
Ball Corp had the following foreign currency transactions during 2019: a) Merchandise was purchased from a foreign supplier on January 20, 2019, for the Philippine peso equivalent of P90,000. The invoice was paid on March 20, 2019, at the Philippine peso equivalent of P96,000. b) On July 1, 2019, Ball borrowed the Philippine peso equivalent of P500,000 evidenced by a note that was payable in the lender's local currency on July 1, 2020. On December 31, 2019, the Philippine peso equivalents of the principal amount and accrued interest were P520,000 and P26,000, respectively. Interest on the note is 10% per annum. In Ball's 2019 income statement, what amount should be included as a foreign exchange trasaction loss? a. P6,000 b. P21,000 c. P0 d. P27,000
Winston Corp., a U.S. company, had the following foreign currency transactions during 2021: ( 1.) Purchased merchandise from a foreign supplier on July 16, 2021 for the U.S. dollar equivalent of $47,000 and paid the invoice on August 3, 2021 at the U.S. dollar equivalent of $54,000. (2.) On October 15, 2021 borrowed the U.S. dollar equivalent of $315,000 evidenced by a non-interest-bearing note payable in euros on October 15, 2022. The U.S. dollar equivalent of the note amount was $295,000 on December 31, 2021, and $299,000 on October 15, 2022. What amount should be included as a foreign exchange gain or loss from the two transactions for 2022?
On December 31, 2021, MATARLO Company received two P1,000,000 notes receivable from customers in exchange for services rendered. On both notes, interest is calculated on the outstanding principal balance at the annual rate of 3% and payable at maturity. The note from MAGLINTE Company, made under customary trade terms, is due in nine months and the note from MADERSE Company is due in five years. The market interest rate for similar notes on December 31, 2021 was 8%. The compound interest factors to convert future value into present value at 8% follow: Present value of 1 due in nine months, 0.944 and the present value of 1 due in five years is 0.680. 33. What is the total carrying amount of the notes receivable to be presented at the 2021 statement of financial position?