Kreighton Manufacturing purchased on credit 54,000 worth of production materials from a British company when the exchange rate was $2.01 per British pound. At the year-end balance sheet date the exchange rate increased to $2.80. If the liability is still unpaid at that time, Kreighton must record a:

Multiple Choice

a. gain of $151,200.

b. loss of $151,200.

c. gain of $42,660.

d. loss of $42,660.

e. neither a gain nor loss.