The accounts of Lin, a U.S. corporation, show $81,300 accounts receivable and $38,900 accounts payable at December

Question:

The accounts of Lin, a U.S. corporation, show $81,300 accounts receivable and $38,900 accounts payable at December 31, 2016, before adjusting entries are made. An analysis of the balances reveals the following:

Accounts Receivable

Receivable denominated in U.S. dollars ..............................$28,500

Receivable denominated in 20,000 Swedish krona ................. 11,800

Receivable denominated in 25,000 British pounds ................. 41,000

Total ......................................................................$81,300

Accounts Payable

Payable denominated in U.S. dollars .................................. $6,850

Payable denominated in 10,000 Canadian dollars .................... 7,600

Payable denominated in 15,000 British pounds ....................... 24,450

Total ........................................................................$38,900

Current exchange rates for Swedish krona, British pounds, and Canadian dollars at December

31, 2016, are $0.52, $1.65, and $0.70, respectively.

REQUIRED

1. Determine the net exchange gain or loss that should be reflected in Lin's income statement for 2016 from year-end exchange adjustments.

2. Determine the amounts at which the accounts receivable and accounts payable should be included in Lin's December 31, 2016, balance sheet.

3. Prepare journal entries to record collection of the receivables in 2017 when the spot rates for Swedish krona and British pounds are $0.55 and $1.63, respectively.

4. Prepare journal entries to record settlement of accounts payable in 2017 when the spot rates for Canadian dollars and British pounds are $0.69 and $1.62, respectively.

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...