Looking for help on Journal Entry 7 ( interest expense and foreign exhange loss) and Journal Entry 8 (not payable and foreign exhange loss).
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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.
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Here in this question, we are required to make journal entry No. 7 and No.8 (As asked)
When loan is taken in the other currency then there is foreign exchange profit/loss comes into picture.
Foreign exchange gain needs to calculate on repayment of loan note because at the time of first recording amount of loan recorded is of the time of that rate.
It also needs to calculate as and when accrued interest is calculated at the end of previous accounting period and interest is paid after accounting period.
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