Question
Assume that your company sells products to a customer located in Switzerland on November 20. The invoice specifies that payment is to be made on
Assume that your company sells products to a customer located in Switzerland on November 20. The invoice specifies that payment is to be made on February 20 in Swiss Francs (CHF) in the amount of CHF 350,000. Your company operates on a calendar year basis.
Assume the following exchange rates:
| November 20 | $1.14:1CHF |
| December 31 | $1.11:1CHF |
| February 20 | $1.13:1CHF |
Prepare the journal entries to record the sale (ignore cost of goods sold), the required adjusting entry at December 31, and the receipt of payment February 20.
| Date | Description | Debit | Credit |
|---|---|---|---|
| 11/20 | AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales
| Answer
| Answer
|
| AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales
| Answer
| Answer
| |
| 12/31 | AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales
| Answer
| Answer
|
| AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales
| Answer
| Answer
| |
| 2/20 | AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales
| Answer
| Answer
|
| AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales
| Answer
| Answer
| |
| Accounts receivable | Answer
| Answer
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
College Accounting A Practical Approach Chapters 1-26
Authors: Jeffrey Slater
8th Edition
0130911429, 978-0130911421
