Question

Peerless Corporation (a U.S.-based company) made a sale to a foreign customer on September 15, for 114,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply:

Date	U.S. Dollar per Crown
September 15	$	0.59
September 30		0.64
October 15		0.62

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

Answer 1

Answer:

Preparation of the Journal Entries for Peerless Corporation in connection with this export sale, assuming that the company closes its books on September 30 to prepare interim financial statements:

Date	Particulars	Debit	Credit
Sept, 15	Accounts Receivable (114,000 Crowns × $0.59)	$67,260
	To Sales A/c (114,000 Crowns × $0.59)		$67,260
Sept, 30	Accounts Receivable {114,000 Crowns × ($0.64 - $0.59)}	$5,700
	To Foreign Exchange Gain		$5,700
Oct, 15	Foreign Exchange Loss Account {114,000 × ($0.64 -$0.62)}	$2,280
	To Accounts Receivables		$2,280
Oct, 15	Cash A/c (114,000 Crowns × $0.62)	$70,680
	To Accounts Receivable (114,000 Crowns × $0.62)		$70,680