Walsh Brands has the following receivables and payables denominated in foreign c
ID: 2500741 • Letter: W
Question
Walsh Brands has the following receivables and payables denominated in foreign currencies, prior to closing on December 31. The spot rates are December 31 are also given:
Item Balance FC Balance Spot Rate
Receivable $100,000 1,000,000 Mexican Pesos $0.06
Receivable 180,000 225,000 Canadian Dollars 0.74
Payable 500,000 400,000 Jordanian Dinars 1.41
Payable 50,000 200,000 Saudi Arabian Riyals 0.27
Prepared the adjusting entry recorded by Walsh Brands at December 31. Show all calculations.
Explanation / Answer
Date Particulars Lf Debit Credit
Dec 31 Transaction loss A/c Dr $4,000
To Accounts Receivable A/c $4,000
Explanation:
$100,000 / 1,000,000=$0.1 *$100,000 =$10,000
Less::
$100,000 * $0.06=$6,000
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Total = $4,000
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______________________________________________________________________________
Dec 31 Transaction loss A/c Dr $10,800
To Accounts Receivable A/c $10,800
Explanation:
180,000 / 225,000 =$0.80 *180,000=$144,000
Less:
180,000 * 0.74==$133,200
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Total = $10,800
_____________________________________________________________________________
Dec 31 Transaction loss A/c Dr $80,000
To Accounts payable A/c $80,000
500,000 / 400,000 = 1.25 * *500,000=$625,000
Less:
*500,000 * 1.41 =$705,000
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Total = $80,000
________________________________________________________________________________
Dec 31 Transaction loss A/c Dr $1,000
To Accounts payable A/c $1,000
50,000 / 200,000 =$0.25 *$50,000=$12,500
Less
50,000 * 0.27=$13,500
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Total =$1,000
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