Chapter 15, Problem 17QS

To determine

Accounting of Foreign Transactions:

Accounting of foreign transactions is required where the business is done in the foreign country in the foreign currency. In such a situation, the problem arises to convert the transaction amount of foreign currency in the domestic currency to record it in books. For such purpose, the foreign exchange rate prevailing at the time of transaction shall be taken for conversion purposes.
However, there may be situation that above transaction is received or paid on later date and foreign exchange rate has been changed. In such cases, any excess need to be paid/received or lesser amount to be paid /received shall be taken as loss or gain on foreign exchange.

To Determine: The Journal entries required for credit sales made and amount recovered on later date for foreign credit sale transaction.