Adjusting Entry at Balance Sheet Date Yum! Brands, Inc. has the following receivables and payables denominated in foreign currencies, prior to closing on December 31. The spot rates at December 31 are also given. Item Current $ balance FC balance December 31 spot rate 1. Receivable $65,000 1,000,000 Mexican pesos $0.06 2. Receivable 165,000 225,000 Canadian dollars 0.75 3. Payable 556,000 400,000 Jordan dinar 1.41 4. Payable 56,000 200,000 Saudi Arabian riyal 0.27 Required Prepare the adjusting entry recorded by Yum! Brands at December 31. Description Debit Credit AnswerAccounts receivableCashExchange gainExchange loss? AnswerAccounts receivableCashExchange gainExchange loss? Accounts payable
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Yum! Brands, Inc. has the following receivables and payables denominated in foreign currencies, prior to closing on December 31. The spot rates at December 31 are also given.
| Item | Current $ balance | FC balance | December 31 spot rate | ||
|---|---|---|---|---|---|
| 1. Receivable | $65,000 | 1,000,000 Mexican pesos | $0.06 | ||
| 2. Receivable | 165,000 | 225,000 Canadian dollars | 0.75 | ||
| 3. Payable | 556,000 | 400,000 Jordan dinar | 1.41 | ||
| 4. Payable | 56,000 | 200,000 Saudi Arabian riyal | 0.27 |
Required
Prepare the adjusting entry recorded by Yum! Brands at December 31.
| Description | Debit | Credit | |
|---|---|---|---|
| AnswerAccounts receivableCashExchange gainExchange loss? | |||
|
AnswerAccounts receivableCashExchange gainExchange loss?
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Accounts payable
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