P 12-4 Accounting for foreign currency–denominated receivables and payables—multiple years The accounts of Lin, a U.S. corporation, show $81,300 accounts receivable and $38,900 accounts payable at December 31, 2016, before adjusting entries are made. An analysis of the balances reveals the following:

Accounts Receivable Receivable denominated in U.S. dollars $28,500 Receivable denominated in 20,000 Swedish krona 11,800 Receivable denominated in 25,000 British pounds 41,000 Total $81,300 Accounts Payable Payable denominated in U.S. dollars $6,850 Payable denominated in 10,000 Canadian dollars 7,600 Payable denominated in 15,000 British pounds 24,450 Total $38,900 Current exchange rates for Swedish krona, British pounds, and Canadian dollars at December 31, 2016, are $0.52, $1.65, and $0.70, respectively.

REQuIRED 1. Determine the net exchange gain or loss that should be reflected in Lin’s income statement for 2016 from year-end exchange adjustments.

2. Determine the amounts at which the accounts receivable and accounts payable should be included in Lin’s December 31, 2016, balance sheet.

3. Prepare journal entries to record collection of the receivables in 2017 when the spot rates for Swedish krona and British pounds are $0.55 and $1.63, respectively.

4. Prepare journal entries to record settlement of accounts payable in 2017 when the spot rates for Canadian dollars and British pounds are $0.69 and $1.62, respectively.