A US Company Takes Delivery of Merchandise Costing £100,000 on October

Essay

A U.S. company takes delivery of merchandise costing £100,000 on October 19, 2020. The company pays for the merchandise, in pounds sterling, on February 19, 2021. It sells the merchandise later in 2021. The U.S. company has a December 31 year-end. Spot rates ($/£) are as follows:
$$\begin{array} { | l | c | } \hline & \text { Spot Rate } \\\hline \text { Oct ober 19, 2020 } & \$ 1.385 \\\hline \text { December 31, 2020 } & 1.387 \\\hline \text { February 19, 2021 } & 1.400 \\\hline\end{array}$$ Required
Calculate the following amounts appearing in the U.S. company's financial statements.
a. Exchange gain or loss, 2020 income statement
b. Exchange gain or loss, 2021 income statement
c. Cost of goods sold, 2021
d. Accounts payable, December 31, 2020 balance sheet