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.
Answer & Explanation
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4.3 Ratings (797 Votes)
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
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