A U.S. company, sells items abroad. Daisy prices many of these transactions in t

Question

A U.S. company, sells items abroad. Daisy prices many of these transactions in the currency of the customer. Following are four such transactions made in the last accounting period, plus the direct exchange rates for each date:

Prepare the journal entries made by Daisy Brands to record the above sale and collection transactions.

Country Amount Currency Spot Rate at Sale Spot Rate at Collection Argentina 250,000 Peso $0.118 $0.121 Canada 400,000 Dollar 0.932 0.954 India 300,000 Rupee 0.016 0.013 South Africa 100,00 Rand 0.091 0.087

Explanation / Answer

Journal Entries :-

Date Particulars Debit($) Credit($) Argentina:- Accounts Receivable A/c Dr. 29500 To Sales Revenue A/c (250000*$0.118) 29500 Cash A/c Dr. (250000*$0.121) 30250 To Accounts Receivable A/c 29500 To Foreign Exchange Gain A/c 750 Canada:- Accounts Receivable A/c Dr. 372800 To Sales Revenue A/c (400000*$0.932) 372800 Cash A/c Dr. (400000*$0.954) 381600 To Accounts Receivable A/c 372800 To Foreign Exchange Gain A/c 8800 India :- Accounts Receivable A/c Dr. 4800 To Sales Revenue A/c (300000*$0.016) 4800 Cash A/c Dr. (300000*$0.013) 3900 Foreign Exchange Loss A/c Dr. 900 To Accounts Receivable A/c 4800 South Africa :- Accounts Receivable A/c Dr. 9100 To Sales Revenue A/c (100000*$0.091) 9100 Cash A/c Dr. (100000*$0.087) 8700 Foreign Exchange Loss A/c Dr. 400 To Accounts Receivable 9100

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