On November 12, Higgins, Inc., a U.S. Company, sold merchandise on credit to Kagome of Japan at a price of 1,690,000 yen. The exchange rate was $.00856 per yen on the date of sale. On December 31, when Higgins prepared its financial statements, the exchange rate was $.00862. Kagome paid in full on January 12, when the exchange rate was $.00880. On December 31, Higgins should prepare the following journal entry:

Multiple Choice

• Debit Sales $101; credit Foreign Exchange Gain $101.

• Debit Foreign Exchange Loss $101; credit Sales $101.

• Debit Accounts Receivable-Kagome $101; credit Foreign Exchange Gain $101.

• Debit Foreign Exchange Loss $101; Accounts Receivable-Kagome $101.

• No journal entry is required until the amount is collected.