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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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On March 1, Friedle Import-Export Company purchased merchandise costing 70,100 Mexican pesos. Payment was due, in pesos, on June 1. The exchange rates of pesos for $1 were as follows:

Chapter 13, Problem 26BEA, On March 1, Friedle Import-Export Company purchased merchandise costing 70,100 Mexican pesos.

Round all answers to the nearest dollar.

Required:

  1. 1. What is the liability in dollars on March 1?
  2. 2. What is the liability in dollars on June 1?
  3. 3. If Friedle pays on June 1, is there an exchange gain or loss? If so, how much is it?

1.

To determine

Compute the amount of liability on 1st March.

Explanation

Exchange Rate:

Exchange rate is a rate at which currencies of two countries can be exchanged. Exchange rates can be quoted directly or indirectly.

Computation of liability as on 1st March:

ParticularsAmount ($)
Amount receivable in MP70,100
Rate of exchange per $10...

2.

To determine

Compute the amount receivable on 1st June.

3.

To determine

Compute gain or loss in case amount is received on 1st June.

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