FUNDAMENTAL ACCT PRIN CONNECT ACCESS
25th Edition
ISBN: 9781265592455
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 15A, Problem 21E
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:
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Journal entries for an account payable denominated in Mexican Pesos ($US weakens and strengthens)
Assume that your company purchases inventories from a Mexican supplier on December 15. The invoice specifies that payment is to be made on March 15 in Mexican Pesos (Peso) in the amount of 350,000
Pesos. Your company operates on a calendar year basis.
Assume the following exchange rates:
December 15 $0.046:1 Peso
December 31 $0.053:1 Peso
March 15
$0.050:1 Peso
Prepare the journal entries to record the purchase (assume perpetual inventory accounting), the required adjusting entry at December 31, and the payment on March 15.
General Journal
Date
Description
Debit
Credit
Accounts payable
Accounts payable
Dec 15 Inventory
Dec 31 Foreign currency transaction loss
Mar 15 Accounts payable
÷
16,100
0
0
16,100
2,450
0
0
2,450
28,000 ×
0
Foreign currency transaction gain
0
10,500 x
Cash
0
17,500
Journal entries for an accounts receivable denominated in Swiss Francs ($US strengthens and weakens)
Assume that your company sells products to a customer located in Switzerland on November 20. The invoice specifies that payment
is to be made on February 20 in Swiss Francs (CHF) in the amount of CHF 250,000. Your company operates on a calendar year basis.
Assume the following exchange rates:
November 20 $1.12:1CHF
December 31 $1.09.1CHF
February 20 $1.11:1CHF
Prepare the journal entries to record the sale (ignore cost of goods sold), the required adjusting entry at December 31, and the receipt
of payment February 20.
Description
Date
11/20 Accounts receivable
Sales
12/31 Foreign currency transaction loss
Accounts receivable
2/20 Cash
Accounts receivable
Accounts receivable
Debit
+ ✓ 250,000 x
+ ✓
✓
# ✓
0✓
10,000 x
0✓
÷ ✓
277,500✔
ooo
4
x
0✔
0✓
Credit
0✓
250,000 x
0✓
10,000 x
277,500 x
0x
Journal entries for an accounts receivable denominated in Swiss Francs ($US strengthens and weakens)
Assume that your company sells products to a customer located in Switzerland on November 20. The invoice specifies that payment is to be made on February 20 in Swiss Francs (CHF) in the amount of CHF 250,000. Your company
operates on a calendar year basis.
Assume the following exchange rates:
November 20 $1.12:1CHF
December 31 $1.09:1CHF
February 20 $1.11:1CHF
Prepare the journal entries to record the sale (ignore cost of goods sold), the required adjusting entry at December 31, and the receipt of payment February 20.
Date
Description
Credit
11/20 Accounts receivable
Sales
12/31 Foreign currency transaction loss
Accounts receivable
2/20 Cash
Accounts receivable
Accounts receivable
→ ✓
✓
✓
+
→
✔
✓
→
Debit
250,000 x
0 ✓
10,000 *
0✔
277,500✔
0✓
0✔
0✔
250,000 *
0✔
10,000 x
0 ✓
277,500 *
0 x
Chapter 15A Solutions
FUNDAMENTAL ACCT PRIN CONNECT ACCESS
Knowledge Booster
Similar questions
- Subject :- Accountingarrow_forward8. Assume that your company purchases inventories from a supplier on December 15. The invoice specifies that payment is to be made on March 15 in Euros in the amount of 10,000 Euros. Your company operates on a calendar year basis. Assume the following exchange rates and the company does not enter into any hedging arrangements: December 15 $1.35 :1 Euro December 31 $1.37 :1 Euro March 15 $1.38 :1 Euro Requirement: Prepare the journal entry that needs to be made on March 15arrow_forward2 XYZ Company sells goods to a foreign customer on June 8. Payment of 3,000,000 foreign currency units (FC) is due in one month. June 30 is XYZ Company’s fiscal year-end. The following exchange rates were in effect during the period: June 8 Spot rate $1.10 June 8 30 day forward rate $1.15 June 30 Spot rate $1.14 July 8 Spot rate $1.20 A For what amount should XYZ Accounts Receivable be debited on June 8 B How much foreign exchange gain or loss should XYZ record on June 30arrow_forward
- P Company had the following transactions with foreign businesses: Billing Currency Exchange Rate (Direct) Nature of Transaction Sold merchandise for 50,000 pesos Received 20% payment Received remaining amount owed Date July 15, 2021 July 20, 2021 July 30, 2021 Pesos $.70 .71 .66 Required: Prepare the journal entries required for each of the three dates above. You can assume that P Company's year-end is December 31.arrow_forwardGreenView Company's receivable from a foreign customer is denominated in the customers local currency, the Brazilian Real (BRL). This receivable totaled 900,000 BRL and was translated to $300,000 at December 31, 20X5. On January 31, 20X6, the receivable was collected from the customer at an exchange rate of 4 BRL to $1. What journal entry should GreenView record in January? Dr. Foreign currency units 300,000 Cr. Accounts receivable Dr. Foreign currency units 225,000 2. Cr. Accounts receivable 01. 03. 4. Dr. Foreign currency units 300,000 Cr. Exchange gain Cr. Accounts receivable Dr. Foreign currency units Dr. Exchange loss Cr. Accounts receivable 225,000 75,000 300,000 225,000 75,000 225,000 300,000arrow_forward8. 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 hearrow_forward
- Help with parts A,B,Carrow_forward1arrow_forwardHonesty Company purchased merchandise worth a total of 100,000 foreign currency on April 1, 2022 from its foreign supplier, payable within 30 days. On April 30, 2022, Honesty paid the note. The following information of spot rates is provided (see image below). Answer the following subquestion(s): a. How much is the foreign exchange gain (loss)? _________________arrow_forward
- Problem 1: On November 1, 2020, an entity acquired on account goods from foreign supplier at a cost of 1,000 USD. The accounts payable are paid on January 30, 2021. On December 1, 2020, an entity sold on account the said goods to a foreign customer at a selling price of 1,500 USD. The accounts receivable is collected on February 28, 2021. The entity is operating in Philippine economy wherein the functional currency is the Philippine Peso. The following direct exchange rates are provided: 12/1/20 12/21/20 1/30/21 11/1/20 2/28/21 Buy Sell 40 39 45 43 42 42 40 47 46 45 What is the sales revenue to be reported by the entity for the year ended December 31, 2020? b. What is the cost of sales to be reported by the entity for the year ended December 31, 2020? What is the book value of accounts receivable on December 31, 2020? d. What is the book value of accounts payable on December 31, 2020? What is the net foreign currency gain or loss for the year ended December 31, 2020? а. С. е.arrow_forward4arrow_forwardClark 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: Маy 8 Мay 31 Spot rate: $1.16 Spot rate: $1.18 Spot rate: $1.12 June 7 For what amount should Clark's Accounts Payable be credited on May 8? Multiple Choice $1,770,000. $1,680,000. $1,740,000. $1,850,000. $1,500,000.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
