Journal entries for an accounts receivable denominated in Swiss Francs ($US strengthens and weakens)

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 200,000. Your company operates on a calendar year basis.

Assume the following exchange rates:

November 20	$1.11:1CHF
December 31	$1.08:1CHF
February 20	$1.10:1CHF

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

PreviousSave AnswersNext