FUNDAMENTAL ACCT PRIN CONNECT ACCESS
25th Edition
ISBN: 9781265592455
Author: Wild
Publisher: MCG
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Question
Chapter 15A, Problem 20QS
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: Journal record to pass entries for the sales and the receipt of payment when exchange rates were changed to $1.35.
Expert Solution & Answer
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 |
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Students have asked these similar questions
Foreign currency transactions Melbourne Ltd purchased goods from France on 3 April 2022 on credit shipped FOB Paris. The cost of good is Euro 500,000 and outstanding as of 31 April 2021. On 3 April 2022, the exchange rate is A$1.00 = Euro 0.67. On 30 April 2022, exchange rate is A$1.00 = Euro 0.66 REQUIRED Provide the accounting entries necessary to account for the above purchase transaction for the month ending 30 April 2022.
A U.S. company sells a product to a British company with the transaction listed in British pounds. On the date of the sale, the transaction total of $14,500 is billed as £10,000, reflecting an exchange rate of 1.45 (that is, $1.45 per pound). Prepare the entry to record (1) the sale and (2) the receipt of payment in pounds when the exchange rate is 1.35.
Foreign currency transactions
Use the following information for the next two questions:
On December 1, 20x1, Entity A sells good to Entity B, on credit, for a total sale price of $1,000.
Entity B settles the account on January 6, 20x1. Entity A's functional currency is the Philippine
peso (P). The relevant exchange rate are as follows:
Dec. 1, 20x1
Dec. 31, 20x1
Jan. 6, 20x1
P50:$1
P52:$1
P41:$1
How much is the foreign exchange gain (loss) to be recognized by Entity A on December 31,
20x1?
Chapter 15A Solutions
FUNDAMENTAL ACCT PRIN CONNECT ACCESS
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