Chocolate De-lites imports and exports chocolate delicacies. Some transactions are denominated in U.S. dollars and others in
Question:
Accounts receivable:
In U.S. dollars ........... $164,000
In 475,000 Egyptian pounds (E£) .... $ 73,600
Accounts payable:
In U.S. dollars ........... $ 86,000
In 21,000,000 yen (¥) .......... $175,300
The spot rates on December 31, 20X6, were
E£1=$0.176
¥1=$0.0081
The average exchange rates during the collection and payment period in 20X7 are
E£1=$0.18
¥1=$0.0078
Required
a. Prepare the adjusting entries on December 31, 20X6.
b. Record the collection of the accounts receivable in 20X7.
c. Record the payment of the accounts payable in 20X7.
d. What was the foreign currency gain or loss on the accounts receivable transaction denominated in E£ for the year ended December 31, 20X6? For the year ended December 31, 20X7? Overall for this transaction?
e. What was the foreign currency gain or loss on the accounts receivable transaction denominated in ¥? For the year ended December 31, 20X6? For the year ended December 31, 20X7? Overall for this transaction?
f. What was the combined foreign currency gain or loss for both transactions? What could Chocolate De-lites have done to reduce the risk associated with the transactions denominated in foreign currencies?
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
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