On May 20, 2016, when the spot rate is $1.28/, a U.S. company buys merchandise from a supplier in Italy, at a cost of 100,000. The spot rate is $1.25/ on June 30, the companys year-end. Payment of 100,000 is made on July 30, 2016, when the spot rate is $1.32/. What is the effect on fiscal 2016 anfid scal 2017 income?

	Fiscal 2016	Fiscal 2017
a.	No effect	$4,000 exchange loss
b.	$3,000 exchange loss	$7,000 exchane gain
c.	No effect	$4,000 exchange gain
d.	$3,000 exchange gain	$7,000 exchange loss