An American Company Makes a Credit Purchase of Goods from a Company

Multiple Choice

An American company makes a credit purchase of goods from a company in London for $500. On the date of purchase, the exchange rate was $1.50 per pound. However, on the date of payment, the rate had risen to $1.55 per pound. As a result, the American company would record

A) an exchange gain of $25.
B) an exchange loss of $775.
C) an exchange loss of $25.
D) no exchange gain or loss.