View the image below and answer the following questions View the image below and

Question

View the image below and answer the following questions View the image below and answer the following questions 1. Assume that your company sells products to a customer located in Switzerland on November 20. The invoice specifies that payment is to be made on February 20 in Swiss Francs (CHF) in the amount of CHF 4,000. Your company operates on a calendar year basis. Assume the following exchange rates: $1.18: 1CHIF $1.05: ICHF $1.12: ICHF November 20 December 31 February 20 Required: a. Prepare the journal entry to record the sale. b. Prepare the journal entry as of Dec. 31 c. Prepare the journal entry as of Feb. 20. Must use full account names for credit Debit Credit

Explanation / Answer

Ans. Date Particulars Debit Credit 20-Nov Accounts receivable 4720 Sales 4720 31-Dec Foreign currency transction loss 520 Accounts receivable 520 20-Feb Cash 4480 Foreign currency transction Gain 280 Accounts receivable 4200 * Amount of sales:(20 Nov.) CHF 4000 * 1.18   = 4720 *Amount of Loss: (31 Dec.) CHF 4000 * (1.18 - 1.05) = 520 *Amount of Gain: (20 feb.) CHF 4000 (1.12 - 1.05) = 280 *Amount of cash: (20Feb.) CHF 4000 * 1.12 = 4480

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