Vitamin, Inc. is a U.S.-based manufacturer and wholesaler. On 10/15/20x1, Vitamin made its first international sale. They sold $450,000 of products to a non-U.S. customer. Vitamin, Inc. agreed to allow the customer to pay for the purchase in its own currency, the FC. To avoid a penalty, the foreign buyer must make payment to Vitamin by February 2, 20x2. At the time of the sale, the FC/$ spot rate was FC1.97=$1 Vitamin, Inc. has a December 31 year-end. At 12/31/20x1, the foreign currency spot rate was FC1.95 = $1. Required: For Vitamin, Inc., Give the journal entries for the 10/15/20x1 sale. Give the journal entries for the foreign currency sale at 12/31/ 20x1, when the company closes its books and prepares its financial statements. Give the journal entries for the receipt of payment on the sale on 2/2/20x2. At that date, the foreign currency spot rate was FC 2.00 = $1
Vitamin, Inc. is a U.S.-based manufacturer and wholesaler. On 10/15/20x1, Vitamin made its first international sale. They sold $450,000 of products to a non-U.S. customer. Vitamin, Inc. agreed to allow the customer to pay for the purchase in its own currency, the FC. To avoid a penalty, the foreign buyer must make payment to Vitamin by February 2, 20x2. At the time of the sale, the FC/$ spot rate was FC1.97=$1 Vitamin, Inc. has a December 31 year-end. At 12/31/20x1, the foreign currency spot rate was FC1.95 = $1. Required: For Vitamin, Inc., Give the journal entries for the 10/15/20x1 sale. Give the journal entries for the foreign currency sale at 12/31/ 20x1, when the company closes its books and prepares its financial statements. Give the journal entries for the receipt of payment on the sale on 2/2/20x2. At that date, the foreign currency spot rate was FC 2.00 = $1
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vitamin, Inc. is a U.S.-based manufacturer and wholesaler. On 10/15/20x1, Vitamin made its first international sale. They sold $450,000 of products to a non-U.S. customer. Vitamin, Inc. agreed to allow the customer to pay for the purchase in its own currency, the FC. To avoid a penalty, the foreign buyer must make payment to Vitamin by February 2, 20x2. At the time of the sale, the FC/$ spot rate was FC1.97=$1
Vitamin, Inc. has a December 31 year-end. At 12/31/20x1, the foreign currency spot rate was FC1.95 = $1.
Required: For Vitamin, Inc.,
- Give the
journal entries for the 10/15/20x1 sale. - Give the journal entries for the foreign currency sale at 12/31/ 20x1, when the company closes its books and prepares its financial statements.
- Give the journal entries for the receipt of payment on the sale on 2/2/20x2. At that date, the foreign currency spot rate was FC 2.00 = $1.
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