Journal entries for an account receivable denominated in Euros (SUS weakens) Ass

Question

Journal entries for an account receivable denominated in Euros (SUS weakens) Assume that your company sells products to a customer located in France on October 15. The invoice specifies that payment is to be made on january 15 in Euros (0 in the amount of 210,000. Your company operates on a calendar year basis. Assume the following exchange rates October 15 105 C1 December 31 $1.15 January 15 $1.20 i Prepare the journal entries to record the sale (gnore cost of goods sold), the required adjusting entry at December 31, and the receipt of payment January 15. General Journal Date Debit Credit Oct 15 Dec 31 Jan 15 Accounts receivable Check

Explanation / Answer

General Journal Date Description Debit Credit Oct 15 Accounts Receivable 220500 Sales 220500 To record the sale at $1.05 :1 Euro December 31 Accounts Receivable 21000 Foreign currency transaction gain 21000 To record the increase in the Account Receivable to$1.15 :1 Euro. January 15 Cash 252000 Foreign currency transaction gain 10500 Accounts Receivable 241500 To record receipt of the Account Receivable at an exchangerate of $1.20 :1 Euro

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