Question: On May 2 0 , 2 0 1 9 , when the spot rate is $ 1 . 0 8 / , a U .

On May

20, 2019,

when the spot rate is $

1.08 /,

a U

.

.

company buys merchandise from a supplier in Italy, LO

1

ssatog

at a cost of

100, 000 .

The spot rate is $

1.05 /

on June

30,

the company

s year

-

end. Payment of

100, 000

is made on July

30, 2019,

when the spot rate is $

1.12 / .

What is the effect on fiscal

2019

and fiscal

2020

income?

Fiscal

2019

Fiscal

2020

.

Noeffect $

4, 000

exchange loss

.

3, 000

exchange loss $

7, 000

exchange gain

.

Noeffect $

4, 000

exchange gain

.

3, 000

exchange gain $

7, 000

exchange loss

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