Oraby Company imports goods from different countries. Some transactions are denominated in U.S. dollars and others...

Oraby Company imports goods from different countries. Some transactions are denominated in U.S. dollars and others in foreign currencies. A summary of accounts receivable and accounts payable on December 31, 2008, before adjustments for the effects of changes in exchange rates during 2008, follows:

Accounts receivable:

In US dollars $100 000

In 60 000 Swiss francs (SFr) $50 000

Accounts payable:
In US dollars $86 000

In 10 000 000 Yen $ 97 000

The spot rates on December 31, 2008, were:
1 SFr = $0.85

1 Yen = $0.0095

The average exchange rates during the collection and payment period in 2009 are:
1 SFr = $0.9

1 Yen = $0.0098

Required:

1) Prepare the adjusting entries on December 31, 2008.
2) Record the collection of the accounts receivable and the payment of the accounts payable in 2009.
3) What was the foreign currency gain or loss on the accounts receivable transaction denominated in SFr for the year ended December 31, 2008? For the year ended December 31, 2009? Overall for this transaction?
4) What was the foreign currency gain or loss on the accounts payable transaction denominated in Yen? For the year ended December 31, 2008? For the year ended December 31, 2009? Overall for this transaction?

Expert Solution

ekkarill92 answered 1 year ago

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