12) Based on the preceding information, the entries on May 31, 20X2, include a 12) A) credit to Foreign Currency Receivable from Exchange Broker, $2,500. B) credit to Foreign Currency Payable to Exchange Broker, $3,500. C) debit to Foreign Currency Transaction Loss, $3,500. D) credit to Foreign Currency Receivable from Exchange Broker, $260,000

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: May 1, 20X2 May 31, 20X2 June 30, 20X2 Spot Rate $ 0.523 $ 0.516 $ 0.508 Forward Rate $ 0.525 (60 days) $ 0.52 (30 days)