Chocolate De-lites imports and exports chocolate delicacies. Some transactions are denominated in U.S. dollars and others...

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Accounting

Chocolate De-lites imports and exports chocolate delicacies.Some transactions are denominated in U.S. dollars and others inforeign currencies. A summary of accounts receivable and accountspayable on December 31, 20X6, before adjustments for the effects ofchanges in exchange rates during 20X6, follows:

  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 andpayment period in 20X7 are
      E£1 = $0.18
        ¥1 =$0.0078
Record the purchase of Japanese yen at the $0.0078 spot rate tosettle the account for December 31, 20X7.

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A Preparing the adjustment entries on December 312016 Accounts Receivable E 10000 4750000176 73600 Foreign Currency transaction Gain 10000 Accounts Payable 5200 175300 2100000000081 Foreign Currency See Answer

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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