Question

1. Suppose that on February 1, 2020, Victoria, Plc., a British company, makes a sale and...

1. Suppose that on February 1, 2020, Victoria, Plc., a British company, makes a sale and ships goods to Hamada, LLC, an Emirati customer, for 100,000 (GBP).

However, it is agreed that Hamada will pay in dirhams on April 2, 2020. The exchange (spot) rate as of February 1, 2020 is 5 dirhams per Great British Pound.

How many dirhams does Hamada agree to pay?

Record the entry in Victoria's books.

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Answer #1
Hamada agree to pay = Sales in GBP x Spot rate per GBP to dirhams
So, Hamada agree to pay =   1,00,000 x 5   =    5,00,000 dirhams
Journal Entry in the books of Victoria's Plc.
GBP GBP
February 1, 2020 Hamada LLC    1,00,000
     Export Sales 1,00,000
April 2, 2020 Cash    1,00,000
     Hamada LLC 1,00,000
Note: Let me know if any explanation required and kindly rate.
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