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$3$ Exercise $11-4($Static$)$ Account Balances LO $11-2$

Merchant Company had the following foreign currency transactions:

$1\mathrm{.}71$

points

References

On November $1,20$X$6,$ Merchant sold goods to a company located in Munich, Germany. The receivable was to be settled in European euros on February $1,20$X$7,$ with the receipt of $250,000$ by Merchant Company.

On November $1,20$X$6,$ Merchant purchased machine parts from a company located in Berlin, Germany. Merchant is to pay $125,000$ on February $1,207.$

The direct exchange rates are as follows:

November $1,206$

$1=$$$0\mathrm{.}60$

$1=$$$0\mathrm{.}62$

$1=$$$0\mathrm{.}58$

February $1,20$X$7$

Required:

Record the T$-$accounts for the following transactions

Note: Record the transactions in the given order.

The November $1,20$X$6,$ export transaction $($sale$).$

The November $1,20$X$6,$ import transaction $($purchase$).$

The December $31,20$X$6,$ year$-$end adjustment required of the foreign currency$-$denominated receivable of $250,000.$

The December $31,206,$ year$-$end adjustment required of the foreign currency$-$denominated payable of $125,000.$

The February $1,20$X$7,$ adjusting entry to determine the U$.$S$.$ dollar$-$equivalent value of the foreign currency receivable on that date.

The February $1,20$X$7,$ adjusting entry to determine the U$.$S$.$ dollar$-$equivalent value of the foreign currency payable on that date.

The February $1,20$X$7,$ settlement of the foreign currency receivable.

The February $1,20$X$7,$ settlement of the foreign currency payable.

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