Question: Rabato Corporation acquired merchandise on account from a foreign supplier

Rabato Corporation acquired merchandise on account from a foreign supplier on November 1, 2011, for 60,000 LCU (local currency units). It paid the foreign currency account payable on January 15, 2012. The following exchange rates for 1 LCU are known:
November 1, 2011 .... $0.345
December 31, 2011 .... 0.333
January 15, 2012 .... 0.359

a. How does the fluctuation in exchange rates affect Rabato’s 2011 income statement?
b. How does the fluctuation in exchange rates affect Rabato’s 2012 income statement?


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  • CreatedOctober 04, 2014
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