Peerless Corporation (a U.S. company) made a sale to a foreign customer on Septe

Question

Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 101,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply:

Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements.

1. Record the entry for sales on credit.

2. Record the entry for changes in the exchange rate.

3. Record the entry for changes in the exchange rate.

4. Record the entry for receipt of payment.

Explanation / Answer

No. Date Particulars Debit Credit 1 Sep-15 Account Receivable 61,610 Sales 61,610 (101000 Crown * $ 0.61) 2 Sep-30 Account Receivable 4,040 Foreign exchange gain 4,040 (101000 Crown * ($ 0.65- $ 0.61)0 3 Oct-15 Bank 61,610 Foreign exchange loss 4,040 Account Receivable 65,650 (Payment of 101000 crown* $ .61)

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