Angelas Artwork Inc. (Angelas) recently entered into a contract to supply artwork to a U.S....
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Accounting
Angelas Artwork Inc. (Angelas) recently entered into a contract to supply artwork to a U.S. company. The controller of Angelas is not experienced with translation of foreign currency transactions and has made the following entries to record sales to the U.S. company without factoring in the impact of foreign currency on the transactions: To record sales in USD:
DR | Accounts receivable | $156,000 | ||
CR | Sales | $156,000 |
To record the collection of a portion of the receivable:
DR | Cash (USD) | $90,000 | ||
CR | Accounts receivable | $90,000 |
To record the conversion of a portion of USD cash to CDN cash:
DR | Cash (CDN) | $78,000 | ||
CR | Sales | $18,000 | ||
CR | Cash (USD) | $60,000 |
Sales were made evenly over a period when the exchange rate was US$1.00 = C$1.33, and the exchange rate at the end of the fiscal year was US$1.00 = C$1.25. What is the correct adjustment to accounts receivable?
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