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: Spot Rate Forward RateMay 1, 20X2$0.523 $0.525(60 days)May 31, 20X2$0.516 $0.52(30 days)June 30, 20X2$0.508 Based on the preceding information, the entries on June 30, 20X2, include a
A. credit to Cash, $262,500.
B. credit to Foreign Currency Units (Br. reals), $262,500.
C. debit to Dollars Payable to Exchange Broker, $254,000.
D. debit to Foreign Currency Transaction Loss, $4,000.
Answer: A
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