Breanna Boutique purchased on credit 50,000 worth of clothing from a British company when the exchange rate was $1.97 per British pound. At the year-end balance sheet date the exchange rate increased to $2.76. Breanna Boutique must record a:

gain of $39,500.
loss of $39,500.
gain of $138,000.
loss of $138,000.
neither a gain nor loss.

Breanna Boutique purchased on credit 50,000 worth of clothing from a British company when the exchange rate was $1.97 per British pound. At the year-end balance sheet date the exchange rate increased to $2.76. Breanna Boutique must record a