On January 1, 2018, Swifty Incorporated sold services to a Canadian supply company and accepted a...

On January 1, 2018, Swifty Incorporated sold services to a Canadian supply company and accepted a three-year note in the amount of 10,100 Canadian dollars. Assume that exchange rates between the U.S. dollar and the Canadian dollar are as follows:

Date		U.S. Dollars per Canadian Dollars
January 1, 2018		$0.96
December 31, 2018		1.00
December 31, 2019		0.92

Provide the journal entries (in U.S. dollars) prepared by Swifty to record the receipt of the note and the exchange gains/losses recognized on December 31, 2018, and December 31, 2019. Ignore any interest on the note. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit


	(Made sale in exchange for a note.)


	(Recorded foreign currency exchange rate gain on receivable.)


	(Incurred foreign currency exchange rate loss on receivable.)

Expert Solution

Answer:

Journal For recording Revenue

January 1st 2018	Notes Receivable	$ 9696
	Service Revenue		$ 9696
	(Recording of revenue taking Exchange rate $ 0.96 per Canadian Dollar)


Journal entry at year end 31st December 2018


December 31st 2018	Foreign Currency Exchange loss	$ 404
	Notes Receivable		$ 404
	(Decrease in value of Dollar recorded)

Jaournal entry at year end 31st december 2019


December 31st 2019	Notes Receivable	$ 808
	Gain on Foreign Currency Exchange		$ 808
	(gain on Foreign Currency recorded)

Working note
Date	Transaction	Amount in Canadian dollar	Exchange rate	Amount in Dollars
Jan 1st 2018	Sale	CAN $ 10100	$ 0.96	$ 9696
Dec 31st 2018	Year end Adjustment	CAN $ 10100	$ 1 00	$ 10100
	Exchange loss			$ 404
31st Dec 2018	Balance of Notes Receivable			$ 10100
31st Dec 2019	Year end Adjustment	CAN $ 10100	$ 0.92	$ 9292
31st Dec 2019	Exchange Gain			$ 808

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