Question

Problem 9-25 (LO 9-2)

Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 116,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply:

September 15	$	0.61
September 30		0.65
October 15		0.60

Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements.

Answer 1

Date	General Jornal	Debit ($)	Credit ($)
Sep-15	Accounts Receivable (116,000 * $0.61)	$       70,760.00
	Sales		$ 70,760.00
	(To record sales to foreign customer)
Sep-30	Accounts Receivable [116,000 * ($0.65 -$0.61)]	$         4,640.00
	To Forign exchange gain		$   4,640.00
	(To record the year end foreign exchange gain)
Oct-15	Forign exchange loss [116,000 * ($0.65 -$0.60)]	$         5,800.00
	Accounts Receivable		$   5,800.00
	(To record the foreign exchange loss on date of payment)
Oct-15	Cash	$       69,600.00
	Accounts Receivable [$70,760+ $4,640 - $5,800]		$ 69,600.00
	(To record receipt of payment)