Reporting Transactions Denominated in Foreign Currencies Western Corporation is a U.S. company with a sales representative in Brazil. To make travel possible, the company purchased an automobile for its representative on January 1, 1999, for 60,000 Brazilian reals. The purchase contract requires the company to pay 25 percent of the purchase price on January 1, 1999, and the remainder in three equal installments at the end of 30 days, 60 days, and 90 days. The exchange rates at the payment dates were:

Note: The real was significantly devalued during this time period and the above rates approximate the actual exchange rates.

a. What was the cost of the automobile in dollars?

b. What amount would Western Company report as accounts payable on January 1, 1999?

c. What amount of gain or loss on foreign currency fluctuations would Western record on January 31, 1999?

d. What balance in accounts payable would Western report on January 31, 1999, after the January payment is made?

e. What amount of gain or loss would Western record on March 2, 1999?

f. What balance in accounts payable would Western report on March 2, 1999, after the March payment is made?
g. What amount of gain or loss would Western record on April 1, 1999?
h. Was Western Corporation better off or worse off by choosing to pay for the automobile in 4 installments rather than making payment in full on January 1, 1999? By what amount?

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January 1, 1999 January 31, 1999 (30 days) March 2, 1999 (60 days) April 1, 1999 (90 days) $1.00 R$1.20 $1.00 R$1.80 = $1.00 = R$2.10 $1.00 R$1.70 =