Tinitoys,Inc

Multiple Choice

Tinitoys,Inc. ,a domestic company,purchased inventory from a Brazilian company for 500,000 Brazilian reals (Br.reals) on May 1,20X2.Payment is due on June 30,20X2.On May 1,20X2,Tinitoys also entered into a 60-day forward contract to purchase 500,000 Brazilian reals.The forward contract is not designated as a hedge.Tinitoys' fiscal year ends on May 31.The direct exchange rates were as follows:

-Based on the preceding information,the entries on May 31,20X2,include a

A) credit to Foreign Currency Payable to Exchange Broker,$3,500.
B) debit to Foreign Currency Transaction Loss,$3,500.
C) credit to Foreign Currency Receivable from Exchange Broker,$2,500.
D) credit to Foreign Currency Receivable from Exchange Broker,$260,000.