Problem 1

Lagos Brokers is a manufacturer of curtains and engages in numerous import and export activities. Lagos receivables and payables in foreign currency units before year-end adjustments on December 31, 2019 are summarized as follows:

Rate on

Foreign Currency Date of Current RateSettlement Rate

Currency Units Transaction 12/31/19 in 2020

Accounts Receivable

British Pds 40,000 1.280 $1.32 $ 1.350

Euros 70,000 1.180 1.19 1.175

Swiss Francs 80,000 1.09 1.065 1.055

Yen 8,000,000 .010 .0088 .0081

Accounts Payable

Brazilian Real 600,000 .183 .202 .215

Pesos 1,250,000 .046 .043 .041

Yen 7,600,000 .015 .019 .021

REQUIRED:

1. Determine the amount at which the receivables and payables should be reported in Lagos December 31, 2019 balance sheet.

2. Calculate currency gains and losses that should appear in Lagos 2019 and 2020 income statements.