A Ltd is a South African company that sells computer equipment.
On 3 January 20.21 they ordered laptops for the amount of $20 000
from a company in the United States of America.
The inventories were shipped free on board (FOB) on 10 January 20.21.
The transaction is uncovered.
The laptops arrived in South Africa on 24 January 20.21.
The foreign creditor was paid on 10 March 20.21.
The financial year end of A Ltd is 28 February.
The amount of exchange rate difference that will be recorded in the Statement
of Profit or Loss of A Ltd for the year ended 28 February 20.21 will be an amount of:
The Exchange Rates for 1USD$=R?
3 January 20.21
R14,65
10 January 20.21
R15,30
24 January 20.21
R15,13
28 February 20.21
R15,07
10 March 20.21
R15,16
a.
R4 600 loss
b.
R8 400 profit
c.
R9 600 profit
d.
R3 400 profit
e.
None of the above is correct.
To calculate the exchange rate difference, we need to first determine the exchange rate on the date of the transaction and on the date of payment.
Exchange rate on 3 January 20.21: R14.65
Exchange rate on 10 March 20.21: R15.16
Amount owed in USD: $20,000
Amount owed in ZAR on 3 January: $20,000 * R14.65 = R293,000
Amount owed in ZAR on 10 March: $20,000 * R15.16 = R303,200
Exchange rate difference: R303,200 - R293,000 = R10,200
Therefore, the amount of exchange rate difference that will be recorded in the Statement of Profit or Loss of A Ltd for the year ended 28 February 20.21 will be an amount of:
R10,200 profit
So, the closest answer is:
c. R9 600 profit