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On March 1, Friedle Import-Export Company sells merchandise costing 75,000 Mexican pesos. Payment will be made in pesos, on June 1. The exchange rates of pesos for $1 were as follows:
| March 1 | $1 = 10.9 pesos | ||
| June 1 | $1 = 11.4 pesos |
Round all answers to the nearest dollar.
Required:
1. What is the receivable in dollars on March 1? $
2. What is the dollar value of the amount paid in pesos on June 1? $
3. If Friedle is paid on June 1, is there an exchange gain or loss? How much was it?
Expert Answer
| 1) Receivable in dollars on March 1 = 75000/10.9 = | $ 6,881 |
| 2) Dollar value of amount paid in Pesos on June 1 = 75000/11.4 = | $ 6,579 |
| 3) Yes, there is an exchange loss. It is $6881-$6579 = | $ 302 |
