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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 Solved by verified expert
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    See Answer
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