FUND.ACCT.PRIN.
25th Edition
ISBN: 9781260247985
Author: Wild
Publisher: RENT MCG
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Chapter 15A, Problem 20E
To determine
Concept Introduction:
Foreign Exchange Rate: It refers to the price of one currency which is expressed in terms of the currency of another country. In other words, the foreign exchange rate is the rate at which the currency of two countries is exchanged.
To prepare:
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Subject :- Accounting
Recording Export Transactions Daisy Brands, a U.S. company, sells items abroad. Daisy prices
many of these transactions in the currency of the customer. Following are four such transactions made in
the last accounting period, plus the direct exchange rates for each date:
Country Amount Currency
Spot rate at
sale
Spot rate
at collection
Argentina . . . . . . . . . . . . . . . . . . . . . . 250,000 Peso $0.056 $0.049
Canada . . . . . . . . . . . . . . . . . . . . . . . . 400,000 Dollar 0.732 0.713
India . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Rupee 0.016 0.018
South Africa . . . . . . . . . . . . . . . . . . . . 100,000 Rand 0.074 0.077
Required
Prepare the journal entries made by Daisy Brands to record the above sale and collection transactions
8. Clark Stone purchases raw material from its foreign supplier, Rinne Clay, on May 8. Payment of 1,500,000 foreign
currency units (FC) is due in 30 days. May 31 is Clark's fiscal year-end. The pertinent exchange rates were as
follows:
May 8
May 31
June 7
Spot rate: $1.16
Spot rate:$1.18
Spot rate: $1.12
For what amount should Clark's Accounts Payable be credited on May 8?
a. $1,680,000.
b. $1,850,000.
c. $1,740,000.
d. $1,500,000.
e. $1,770,000.
in he
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