Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 11, Problem 11.8E
Chocolate De−lites imports and exports chocolate delicacies. Some transactions are denominated in U.S. dollars and others in foreign currencies. A summary of accounts receivable and accounts payable on December 31, 20X6, before adjustments for the effects of changes in exchange rates during 20X6, follows:
The spot rates on December 31, 20X6, were
E€1 = $0.176
¥1 = $0.0081
The average exchange rates during the collection and payment period in 20X7 are
E€1 = $0.18
¥1 = $0.0078
Required
a. Prepare the adjusting entries on December 31, 20X6.
b. Record the collection of the accounts receivable in 20X7.
c. Record the payment of the accounts payable in 20X7.
d. What was the foreign currency gain or loss on the accounts receivable transaction denominated in E€ for the year ended December 31, 20X6? For the year ended December 31, 20X7? Overall for this transaction?
e. What was the foreign currency gain or loss on the accounts receivable transaction denominated in ¥? For the year ended December 31, 20X6? For the year ended December 31, 20X7? Overall for this transaction?
f. What was the combined foreign currency gain or loss for both transactions? What could Chocolate De-lites have done to reduce the risk associated with the transactions denominated in foreign currencies?
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Dexter Inc. had the following items in its unadjusted and adjusted trial balances at December 31, 20X5:
Trial Balances
Unadjusted
Adjusted
$41,700
Accounts Receivable (denominated in Australian dollars)
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Foreign Currency Receivable from Exchange Broker
Accounts Payable (denominated in South Korean won)
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000
009 ov
000
000 08
000 18
009
Additional Information
1. On December 1, 20X5, Dexter sold goods to a company in Australia for A$70,000. Payment in Australian dollars is due on January
30, 20X6. On the transaction date, Dexter entered into a 60-day forward contract to sell 70,000 Australian dollars on January 30,
20X6. The 30-day forward rate on December 31, 20X5, was A$1= $0.57.
2. On October 2, 20X5, Dexter purchased equipment from a South Korean company for KRW400,000, payable on January 30, 20X6.
On the transaction date, Dexter entered into a 120-day forward…
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Chapter 11 Solutions
Advanced Financial Accounting
Ch. 11 - Prob. 11.1QCh. 11 - Prob. 11.2QCh. 11 - The U.S. dollar strengthened against the European...Ch. 11 - Prob. 11.4QCh. 11 - Prob. 11.5QCh. 11 - How are assets and liabilities denominated in a...Ch. 11 - Prob. 11.7QCh. 11 - Prob. 11.8QCh. 11 - Prob. 11.9QCh. 11 - Distinguish between an exposed net asset position...
Ch. 11 - Prob. 11.11QCh. 11 - Prob. 11.12QCh. 11 - Effects of Changing Exchange Rates Analysis Since...Ch. 11 - Prob. 11.2CCh. 11 - Prob. 11.5CCh. 11 - Prob. 11.1ECh. 11 - Prob. 11.2ECh. 11 - Basic Understanding of Foreign Exposure The...Ch. 11 - Prob. 11.5ECh. 11 - Prob. 11.6ECh. 11 - Prob. 11.7ECh. 11 - Adjusting Entries for Foreign Currency Balances...Ch. 11 - Prob. 11.9ECh. 11 - Prob. 11.10ECh. 11 - Prob. 11.11.1ECh. 11 - Prob. 11.11.2ECh. 11 - Prob. 11.11.3ECh. 11 - Prob. 11.11.4ECh. 11 - Prob. 11.11.5ECh. 11 - Prob. 11.11.6ECh. 11 - Prob. 11.11.7ECh. 11 - Prob. 11.12ECh. 11 - Prob. 11.13ECh. 11 - Prob. 11.14.1ECh. 11 - Foreign Currency Transactions [AICPA Adapted]...Ch. 11 - Prob. 11.14.3ECh. 11 - Prob. 11.14.4ECh. 11 - Prob. 11.14.5ECh. 11 - Foreign Currency Transactions [AICPA Adapted]...Ch. 11 - Prob. 11.14.7ECh. 11 - Prob. 11.15ECh. 11 - Prob. 11.16AECh. 11 - Prob. 11.17ECh. 11 - Prob. 11.18ECh. 11 - Prob. 11.19.1ECh. 11 - Prob. 11.19.2ECh. 11 - Prob. 11.19.3ECh. 11 - Prob. 11.19.4ECh. 11 - Prob. 11.19.5ECh. 11 - Prob. 11.20.1PCh. 11 - Prob. 11.20.2PCh. 11 - Prob. 11.20.3PCh. 11 - Prob. 11.20.4PCh. 11 - Prob. 11.20.5PCh. 11 - Foreign Sales Tex Hardware sells many of its...Ch. 11 - Prob. 11.22PCh. 11 - Prob. 11.23.1PCh. 11 - Prob. 11.23.2PCh. 11 - Prob. 11.24PCh. 11 - Prob. 11.25PCh. 11 - Prob. 11.26PCh. 11 - Prob. 11.27.1PCh. 11 - Prob. 11.27.2PCh. 11 - Prob. 11.27.3PCh. 11 - Prob. 11.28APCh. 11 - Prob. 11.29.1BPCh. 11 - Prob. 11.29.2BPCh. 11 - Prob. 11.29.3BPCh. 11 - Prob. 11.29.4BPCh. 11 - Prob. 11.29.5BPCh. 11 - Prob. 11.29.6BPCh. 11 - Prob. 11.30BPCh. 11 - Prob. 11.31BPCh. 11 - Matching Key Terms Match the items in the lefthand...
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