On May 8, 2017, Jett Company (a U.S. company) made a credit sale to Lopez (a Mex

Question

On May 8, 2017, Jett Company (a U.S. company) made a credit sale to Lopez (a Mexican company). The terms of the sale required Lopez to pay 760,000 pesos on February 10, 2018. Jett prepares quarterly financial statements on March 31, June 30, September 30, and December 31. The exchange rates for pesos during the time the receivable is outstanding follow.

Compute the foreign exchange gain or loss that Jett should report on each of its quarterly income statements for the last three quarters of 2017 and the first quarter of 2018.

May 8, 2017 $ 0.1855 June 30, 2017 0.1864 September 30, 2017 0.1875 December 31, 2017 0.1858 February 10, 2018 0.1897

Explanation / Answer

Answer

Combined net gain (2964-1292+836+684) =$3192

Quarter Ended june 30,2017 May 8 (760000*0.1855) 140980 June 30 (760000*0.1864) 141664 Foreign exchange gain 684 Quarter Ended September 30,2017 June 30 (760000*0.1864) 141664 Sept.30 (760000*0.1875) 142500 Foreign exchange gain 836 Quarter Ended December 30,2017 Sept.30 (760000*0.1875) 142500 Dec. 31 (760000*0.1858) 141208 Foreign exchange Loss 1292 Quarter Ended March 30,2017 Dec. 31 (760000*0.1858) 141208 Feb.10.2018 (760000*0.1897) 144172 Foreign exchange gain 2964

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