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Question

Reading Co. (a US publisher) sold books to El Paso (a Mexican bookstore) for 1,000,000 pesos payable in 30 days. The spot exchange rate and the exchange rate in 30 days are listed below.

Spot	$1.75 = 1 peso
In 30 days	$1.90 = 1 peso

El Paso pays the 1,000,000 pesos to Reading 30 days after purchase. Reading's foreign currency gain or loss on this transaction is $________.

Note: For all fill-in-the-blank questions do not put commas in your answer and if a loss occurs use a negative sign - for example: -400000 for a 400,000 loss.

Use the following for Questions 3-11.

Bluejay Buddies Case

Bluejay Buddies (BB) is owned by Creighton Industries, a US conglomerate. BBs local currency is the Canadian dollar and its functional currency and presentation currency are both the US$. It began operations on January 1, 2009. Financial statements for 2009 are shown below. Your job is to convert the financials using the appropriate accounting method.

Bluejay Buddies (in millions) Balance Sheet December 31, 2009

Assets	$ Canadian	Exchange Rate	$ US
Cash	78
Accounts Rec.	150
Inventory	100
Total Current Assets	328
Property Plant & Equip.	800
Less: Accum. Depr	-50
Total Assets	1,078
Liabilities and Equity
Accounts Payable	100
Total Current Liabilities	100
Long-term notes payable	200
Total Liabilities	300
Capital stock	400
Retained Earnings	378
Total	1,078

Bluejay Buddies (in millions) Income Statement For the year ending December 31, 2009

	Canadian $	Exchange Rate	USD
Sales	2,000
COGS	1,400
Selling Expenses	100
Depreciation Expense	50
Interest Expense	30
Income Tax	42
Income Before Translation Gain/loss	N/A
Translation Gain/Loss	N/A
Net Income	378

Currency Exchange Rates

Date	USD / CD
January 1, 2009	$1.40 / CD
Average	$1.30 / CD
Weighted Avg. when inventory is acquired	$1.35 / CD
December 31, 2009	$1.20 / CD

Question

Flag question: Question 4

Question 41

The US $ value for the cash account is $______. Your answer should be in millions rounded to 1 decimal place. For example 50.2 for $50.2 million.

Question 51

The appropriate rate to use for the Property, Plant and Equipment account is the historical rate of $1.40/CD$.

True

False

Question 61 pts

Under either the all current or the temporal method, Capital Stock is translated at the current rate.

Group of answer choices

True

False

Flag question: Question 7

Question 71 pts

The exchange rate to use when translating Retained Earnings for Bluejay Buddies is the average rate.

Group of answer choices

True

False

Flag question: Question 8

Question 81 pts

The US$ value of Retained Earnings at the end of 2009 is equal to $________.

Flag question: Question 9

Question 91 pts

The US$ value of Cost of Goods Sold (COGS) is equal to $________.

Flag question: Question 10

Question 101 pts

The translation gain or loss is equal to $________.

Flag question: Question 11

Question 111 pts

What was the cause of the translation gain or loss?

Group of answer choices

Net monetary liability position, weakening CD.

Net monetary asset position, strengthening CD.

Net monetary asset position, weakening CD.

Net monetary liability position, strengthening CD.

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