![Fundamental Accounting Principles](https://www.bartleby.com/isbn_cover_images/9781260780222/9781260780222_largeCoverImage.gif)
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: Journal record to pass entries for the sales and the receipt of payment when exchange rates were changed to $1.35.
![Check Mark](/static/check-mark.png)
Explanation of Solution
Information Assumed:
The exchange rate at the time of purchase was $1.45
Exchange rates were $1.35 at the time of receivables payment
Credit sales of 10,000 pounds
In this situation, Company sold merchandise of amount 10,000 pounds when exchange rates were $1.45 per pound. At the time of cash receipts, the exchange rates were reduced and the company will bear an exchange loss of $1000.
Following are the
Date | Particulars | Debit | Credit |
$14,500 | |||
Sales | $14,500 | ||
Record the sales of 10,000 pounds when exchange rates were $1.45 per pound | |||
Cash | $13,500 | ||
Foreign exchange loss | $1,000 | ||
Accounts receivables | $14,500 | ||
Record foreign exchange loss at the time of cash receipts on merchandise sale |
Want to see more full solutions like this?
Chapter 15A Solutions
Fundamental Accounting Principles
- L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: Assume another customer has returned a pair of duck boots (original cost $109) to L.L. Bean. What journal entry would L.L. Bean make to process the return and refund the original purchase price to the customer?arrow_forwardKreeps Corporation produces a single productarrow_forwardA college's food operation has an average meal price of $9.20. Variable costs are $4.35 per meal and fixed costs total $95,000. How many meals must be sold to provide an operating income of $33,000? How many meals would have to be sold if fixed costs declined by 23%? (round to the nearest meal)arrow_forward
- A firm has net working capital of $980, net fixed assets of $4,418, sales of $9,250, and current liabilities of $1,340. How many dollars worth of sales are generated from every $1 in total assets? Need answerarrow_forwardA firm has net working capital of $980, net fixed assets of $4,418, sales of $9,250, and current liabilities of $1,340. How many dollars worth of sales are generated from every $1 in total assets?arrow_forward???arrow_forward