On January 1, 2015, Outreach Incorporated sold services to a Canadian s three- d
ID: 2409415 • Letter: O
Question
On January 1, 2015, Outreach Incorporated sold services to a Canadian s three- dollar and the Canadian dollar are as follows: upply company and accepted a -year note in the amount of 11,000 Canadian dollars. Assume that exchange rates between the U.s U.S. Dollars Per Canadian Dollars $0.95 0.99 0.90 Date January 1, 2015 December 31,2015 December 31,2016 Provide the journal entries (in U.S. dollars) prepared by Outreach to record the receipt of the note and the exchange gains/losses recognized on December 31, 2015, and December 31, 2016. Ignore any interest or the note.Explanation / Answer
Journal For recording Revenue
January 1st 2015
Notes Receivable
$ 11,578.94
Service Revenue
$ 11,578.94
(Recording of revenue taking Exchange rate $ 0.95 per Canadian Dollar)
Journal entry at year end 31st December 2015
December 31st 2015
Foreign Currency Exchange loss
$ 467.83
Notes Receivable
$ 467.83
(Decrease in value of Dollar recorded)
Jaournal entry at year end 31st december 2016
December 31st 2016
Notes Receivable
$ 1,111.11
Gain on Foreign Currency Exchange
$ 1,111.11
(gain on Foreign Currency recorded)
Working note
Date
Transaction
Amount in Canadian dollar
Exchange rate
Amount in Dollars
Jan 1st 2015
Sale
CAN $ 11000
$ 0.95
$ 11,578.95
Dec 31st 2015
Year end Adjustment
CAN $ 11000
$ 0.99
$ 11,111.11
Exchange loss
$ 467.84
31st Dec 2015
Balance of Notes Receivable
$ 11,111.11
31st Dec 2016
Year end Adjustment
CAN $ 11000
$ 0.90
$ 12,222.22
31st Dec 2016
Exchange Gain
$ 1,111.11
Journal For recording Revenue
January 1st 2015
Notes Receivable
$ 11,578.94
Service Revenue
$ 11,578.94
(Recording of revenue taking Exchange rate $ 0.95 per Canadian Dollar)
Journal entry at year end 31st December 2015
December 31st 2015
Foreign Currency Exchange loss
$ 467.83
Notes Receivable
$ 467.83
(Decrease in value of Dollar recorded)
Jaournal entry at year end 31st december 2016
December 31st 2016
Notes Receivable
$ 1,111.11
Gain on Foreign Currency Exchange
$ 1,111.11
(gain on Foreign Currency recorded)
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