A U.S. company sells a product to a British company with the transaction listed in British pounds.

Question:

A U.S. company sells a product to a British company with the transaction listed in British pounds. On the date of the sale, the transaction total of $40,600 is billed as £20,000, reflecting an exchange rate of 2.03 (that is, $2.03 per pound). Prepare the entry to record (1) the sale and (2) the receipt of payment in pounds when the exchange rate is 1.95.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...