Question

what is the impact 2017 income /18? please show work. so confused on getting the answer

No Credit Date 12/01/2017 General Journal Cost of goods sold Accounts payable (K) Debit 59,500.00 59,500.00 2 1 2/01/2017 No journal entry required 3 12/31/2017 1,700.00 Foreign exchange loss Accounts payable (K) 1,700.00 4 12/31/2017 2,083.14 Forward contract Accumulated other comprehensive 2,083.14 S8 EQ 25 12/31/2017 1,700.00 Accumulated other comprehensive incom Gain on forward contract 1,700.00 6 12/31/2017 425.00 Premium expense Accumulated other comprehensive income 425.00 03/01/2018 2,550.00 Foreign exchange loss Accounts payable (K) 2,550.00 03/01/2018 891.86 Forward contract Accumulated other comprehensive income 891.86 03/01/2018 2,550.00 Accumulated other comprehensive income Gain on forward contract 2,550.00

Answer 1

Impact on 2017 income:
Parts Inventory (COGS)	$  59,500.00
Foreign Exchange Loss	$   (1,700.00)
Gain on forward contract	$    1,700.00
Premium Expense	$      (425.00)
Total	$  59,075.00
Impact on 2018 income:
Foreign Exchange Loss	$   (2,550.00)
Gain on forward contract	$    2,550.00
Premium Expense	$      (850.00)
Total	$      (850.00)
Impact on net income over 2017 and 2018 = $(59,075) + $(850) = $(58,225); equal to cash outflow