Question

Question #10:

Garden Grove Corporation made an export sale of goods to a French customer on September 15, 2015, for 250,000 Euros.  Payment was subsequently received on October 15, 2015.  The following exchange rates apply:

      Date                                                                                       U.S. Dollar per Euro

      September 15, 2015 ……………………………………..           $0.45

      September 30, 2015 ……………………………………..             0.42

      October 15, 2015 ………………………………………….             0.37                                                   

Required:  Prepare all journal entries for Garden Grove Corporation in connection with this sale, assuming that the company closes its books on September 30^thto prepare interim financial statements:

September 15, 2015:  Sale and recording of receivable

                                                                                                                                    Debit                           Credit

September 30, 2015:  Revaluation of receivable based on rate on 09-30-15

                                                                                                                                    Debit                           Credit

October 15, 2015:  Revaluation of receivable based on change of rate between Sept. 30 & Oct. 15. Record receipt of cash from French customer and settlement of receivable.

                                                                                                                                    Debit                          Credit

                                                                                                                                    Debit                           Credit

Answer 1

Garden Grove Corporation

Journal Entries

Date

Description

Debit

Credit

9/15/2015 Account receivable (250,000 x 0.45)

Sales

9/30/2015 Foreign exchange loss [250,000 (0.45 - 0.42)]

Account receivable

10/15/2015 Foreign exchange loss [250,000 (0.42 - 0.37)]

Account receivable

10/15/2015 Cash (250,OOOXO.37)

Account receivable

9/30/2015

Account receivable dated 09.15.2015

Account receivable dated 09.30.2015 (250000 x 0.42)

Loss Due to foreign exchange on 09.30.2015

10/15/2015

Account receivable dated 09.30.2015

Account receivable dated 10.15.2015 (250,000 x 0.37)

Loss Due to foreign exchange on 10.15.2015

112,500

112,500

7,500

7,500

12,500

12,500

92,500

92,500

112,500

105,000

7,500

105,000

92,500

12,500