Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 15

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:
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