Problem 1: On Nov 1, 2020, an entity acquired on account goods from a foreign supplier at a cost of $1,000. The accounts payable are paid on January 30, 2021.

On Dec 1, 2020, an entity sold on account the said goods to a foreign customer at a selling price of $1,500. The accounts receivable are collected on Feb 28, 2021.

The entity is operating in the Philippine economy wherein the functional currency is the Philippine peso.

The following direct exchange rates are provided:

Buying spot rate Selling spot rate

Nov 1, 2020 P40 P42

Dec 1, 2020 39 40

Dec 31, 2020 45 47

What is the sales revenue for 2020?

a. 58,500

b. 60,000

c. 67,500

d. 72,000

What is the carrying amount of accounts receivable on Dec 31, 2020?

a. 58,500

b. 60,000

c. 67,500

d. 72,000

What is the carrying amount of the accounts payable on Dec 31, 2020?

a. 40,000

b. 42,000

c. 45,000

d. 47,000

What is the net foreign currency gain for 2020?

a. 4,000

b. 5,000

c. 3,000

d. 6,000

Problem 2: Vector Corp issued a promissory note denominated in foreign currency for the purchase made from a supplier in England on Dec 1, for a 60-day, 18% promissory note for 108,000 pounds, at a selling rate of 1FC to P74.20. On Dec 31, the selling spot rate is 1FC to P74.85. On January 30, the selling spot rate is 1FC to P75.75.

On the settlement date, how much is the foreign exchange gain/loss?

a. 172,422 gain

b. 100,116 loss

c. 172,422 loss

d. 98,658 loss