Question: Marko Company sold spray paint equipment to Spain for 5 000 000

Marko Company sold spray paint equipment to Spain for 5,000,000 pesetas (P) on October 1, with payment due in six months. The exchange rates were
October 1, 20X6 ... 1 peseta = $0.0068
December 31, 20X6... 1 peseta = 0.0078
April 1, 20X7...... 1 peseta = 0.0076

Required
a. Did the dollar strengthen or weaken relative to the peseta during the period from October 1 to December 31? Did it strengthen or weaken between January 1 and April 1 of the next year?
b. Prepare all required journal entries for Marko as a result of the sale and settlement of the foreign transaction, assuming that its fiscal year ends on December 31.
c. Did Marko have an overall net gain or net loss from its foreign currency exposure?


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  • CreatedMay 23, 2014
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