Question

Recording Export Transactions

Daisy Brands, a U.S. company, sells items abroad. Daisy prices many of these transactions in the currency of the customer. Following are four such transactions made in the last accounting period, plus the direct exchange rates for each date:

Country	Amount		Currency		Spot rate at sale		Spot rate at collection
Argentina	250,000		Peso		$0.056		$0.049
Canada	400,000		Dollar		0.732		0.713
India	300,000		Rupee		0.016		0.018
South Africa	100,000		Rand		0.074		0.077

Required

Prepare the journal entries made by Daisy Brands to record the above sale and collection transactions.

Argentina

Description		Debit	Credit
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record purchase of inventory
Foreign currency		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record purchase sufficient foreign currency to pay supplier.
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record payment of liability to supplier.

Canada

Description		Debit	Credit
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record purchase of inventory
Foreign currency		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record purchase sufficient foreign currency to pay supplier.
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record payment of liability to supplier.

India

Description		Debit	Credit
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record purchase of inventory
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
Accounts receivable		Answer	Answer
To record purchase sufficient foreign currency to pay supplier.
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record payment of liability to supplier.

South Africa

Description		Debit	Credit
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record purchase of inventory
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
Accounts receivable		Answer	Answer
To record purchase sufficient foreign currency to pay supplier.
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
AnswerAccounts receivableCashExchange gainExchange lossForeign currencySales		Answer	Answer
To record payment of liability to supplier.

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Answer 1

JOURNAL ENTRIES IN THE BOOKS OF DAISY BRANDS
NO.	DESCRIPTION	DEBIT	CREDIT
	Argentina
1	Account Receivables A/c                             Dr.	14000
	To Foreign Currency Sales		14000
	Being goods sold to Argentina customer for 250000 pesos at an exchange rate of $0.056 / peso
2	Bank A/c                                                             Dr.	12250
	Foreign Exchange Loss A/c                         Dr.	1750
	To Account Receivables A/c		14000
	Being Amount of 250000 pesos from the Argentina Customer is collected at an exchange rate of $0.049
	and foreign currency loss of $ 1750 is entered
	Canada
3	Account Receivables A/c                             Dr.	292800
	To Foreign Currency Sales		292800
	Being goods sold to a Canadian customer for 400000 Canadian dollars at an exchange rate of $0.056 / Canadian dollar
4	Bank A/c                                                             Dr.	285200
	Foreign Exchange Loss A/c                         Dr.	7600
	To Account Receivables A/c		292800
	Being Amount of 400000 Canadian dollars is collected at an exchange rate of $0.713
	and foreign currency loss of 7600 is entered.
	India
5	Account Receivables A/c                             Dr.	4800
	To Foreign Currency Sales		4800
	Being goods sold to Indian customer for 300000 Rupees at an exchange rate of $0.016 /Rupee
6	Bank A/c                                                             Dr.	5400
	To Account Receivables		4800
	To Foreign Exchange gain		600
	Being Amount of Rs. 300000 received from Indian customer at an exchange rate of $ 0.018 / Rupee
	and a Foreign exchange gain of $ 600 is entered.
	South Africa
7	Account Receivables A/c                             Dr.	7400
	To Foreign Currency Sales		7400
	Being goods sold to South African customer for 100000 Rand at an exchange rate of $0.074 /Rand
8	Bank A/c                                                             Dr.	7700
	To Account Receivables		7400
	To Foreign Exchange gain		300
	Being Amount of 100000 Rand received from South African customer at an exchange rate of $ 0.077 / Rand
	and a Foreign exchange gain of $ 300 is entered.