Advacc Forex

Chapter 12 Test Bank
FOREIGN CURRENCY CONCEPTS AND TRANSACTIONS
Multiple Choice Questions
LO1
1. On May 1, 20X3, Emu Corporation purchased merchandise from a
Danish firm for 198,000 Danish krone when the spot rate for
krone was 5.200 krone per dollar. The account payable was
denominated in krone. Emu settled the account on September 1
when the spot rate for krone was 5.345 krone per dollar. How
much cash will Emu have to disburse to settle the account?
a. $ 37,043.97.
b. $ 38,076.93.
c. $1,029,600.00.
d. $1,058,310.00.
LO1
2. Cassowary Corporation’s balance sheet at December 31, 20X3
included a $20,400 account receivable from Quail Corporation of
Australia. The account receivable was denominated as 30,000
Australian dollars (A$). What entry did Cassowary make on
January 16, 20X3 when the account receivable was collected and
the exchange rate for A$ was $.67?
a. Cash 20,100
Accounts Receivable 20,100
b. Cash 20,100
Exchange Loss 300
c. Cash 20,400
d. Cash 20,700
Exchange Gain 300
©2009 Pearson Education, Inc. publishing as Prentice Hall

12-1
LO2
3. The exchange rates between the Australian dollar and the US
dollar were as follows:
Jun 1 1$AUS = $.71US

Jul 1 1$AUS = $.73US
Aug 1 1$AUS = $.79US
Sep 1 1$AUS = $.83US
This chart shows a
a. strengthening Australian Dollar which makes it less

expensive for Americans to buy Australian goods.
b. weakening Australian dollar which makes it less expensive
for Americans to buy Australian goods.
c. strengthening Australian dollar which makes it more
expensive for Americans to buy Australian goods.
d. weakening Australian dollar which makes it more expensive
for Americans to buy Australian goods.
LO2
4. Which of the following factors will affect the spread between
spot and forward rates?
a. The current cross rate between two currencies.

b. The length of time for the forward contract.
c. The currency denominated as the domestic currency.
d. All of the above will affect the spread.
LO2
5. A US importer that purchased merchandise from a South Korean
firm would be exposed to a net exchange gain on the unpaid
balance if the
a. dollar weakened relative to the Korean won and the won was
the denominated currency.
b. dollar weakened relative to the Korean won and the dollar
was the denominated currency.
c. dollar strengthened relative to the Korean won and the won
was the denominated currency.
d. dollar strengthened relative to the Korean won and the
dollar was the denominated currency.

12-2
Use the following information for Questions 6 and 7.
On November 1, 20X3, Magpie Corporation sold merchandise to William

Tell Corporation, a Swiss firm. Magpie measured and recorded the
account receivable from the sale at $78,000. William Tell paid for
this account on November 30, 20X3. Spot rates for Swiss francs on
November 1 and November 30, respectively, were $0.80 and $0.78.
LO3
6. If the sale of the merchandise was denominated in francs, the
November 30 entry to record the receipt of payment from William
Tell included a
a. credit to Accounts Receivable for $76,050.

b. credit to Exchange Gain for $1,950.
c. debit to Cash for $78,000.
d. debit to Exchange Loss for $1,950.
LO3
7. If the sale of merchandise is denominated in dollars, the
November 30 entry to record receipt of the payment from William
Tell included a
a. debit to Cash for $78,000.

b. debit to Cash for $76,050.
c. credit to Exchange Gain for $1,950.
d. credit to Accounts Receivable for $76,050.
LO3
8. On December 5, 20X3, Goose Corporation, a US firm, bought
inventory items from Grebes Corporation of Norway for 1,000,000
Norwegian krone when the spot rate for krone was $0.168. At
Goose’s December 31, year-end, the spot rate was $0.167. On
January 4, 20X4, Goose purchased 1,000,000 krone for $167,500
and paid the invoice. How much gain or (loss) did Goose report
in its 20X3 and 20X4, respectively, income statements?
a. $(1,000) and $500.

b. $0 and ($500).
c. $0 and $500.
d. $1,000 and ($500).

12-3
Use the following information for Questions 9 and 10.
On October 2, 20X4, Duck Corporation borrowed 150,000 British pounds

from a London bank, evidenced by an interest-bearing note payable due
in one year. The note was payable in pounds. Exchange rates for
pounds was:
October 2, 20X4 $1.60

December 31, 20X4 $1.62
October 2, 20X5 $1.56
LO3
9. What exchange gain or loss appeared on Duck’s 20X4 income
statement?
a. a loss of $6,000.
b. a loss of $3,000.
c. a gain of $3,000.
d. a gain of $6,000.
LO3
10. What is the final amount of the loan payable that Duck showed
on its books, in dollars, just before it repaid the loan?
a. $234,000.
b. $236,000.
c. $240,000.
d. $243,000.
Use the following information for questions 11 and 12.
On November 2, 20X5, Swan Corporation entered into a 90-day contract

to sell 220,000 kiwis in a transaction accounted for as speculation.
The spot rate for kiwis on November 2 was $0.74 and the current
quotation for 90-day futures was $0.68. On December 31, 20X3, the
spot rate was $0.78 and the quotation for 30-day futures was $0.35.

12-4
LO4
11. Swan’s entry on November 2, 20X5 included a
a. debit to Contract Receivable denominated in kiwis for

$149,600.
b. credit to Contracts Payable denominated in kiwis for
$149,600.
c. debit to Contract Receivable denominated in kiwis for
$154,000.
d. credit to Contracts Payable denominated in kiwis for
$154,000.
LO4
12. What amount of exchange gain or (loss) was included in Swan’s
20X5 income?
a. $(8,800).
b. $(4,400).
c. $ 4,400.
d. $ 8,800.
LO4
13. Under which of the following situations must a discount on a
forward contract be amortized to income over the life of the
contract?
a. If the contract is a hedge of a net asset position.

b. If the contract is a speculation in currency.
c. If the contract is a hedge of a foreign currency
commitment.
d. Under none of the above would a discount on a forward
contract be amortized to income over the life of the
contract.
LO4
14. A forward exchange contract is transacted at a discount if the
current forward rate is
a. less than the current spot rate.

b. more than the current spot rate.
c. less than the expected spot rate.
d. more than the expected spot rate.

12-5
LO5
15. Which of the following is not a characteristic of a derivative?
a. It has one or more underlyings and one or more notational

amounts.
b. It requires no initial net investment or an initial
investment that is smaller than would be required for
contracts expected to have a similar response to the
market.
c. It requires no net settlement.
d. It will be represented as an asset or liability on the
financial statements.
LO5
16. Derivatives are measured on the financial statements at?
a. Historical cost.
b. Effective hedge price.
c. Strike price.
d. Fair value.
LO6
17. Which of the following hedging strategies would a business most
likely use?
a. An importer will want to hedge his foreign denominated

accounts receivable and will purchase forward contracts to
hedge an exposed net asset position.
b. An importer will want to hedge his foreign denominated
accounts payable and will purchase forward contracts to
hedge an exposed net liability position.
c. An exporter will want to hedge his foreign denominated
accounts receivable and will purchase forward contracts to
d. An exporter will want to hedge his foreign denominated
accounts payable and will purchase forward contracts to

12-6
LO6
18. Which of the following techniques can be used to measure hedge
effectiveness?
a. Critical term analysis.

b. Contribution margin analysis.
c. Present value analysis.
d. Breakeven analysis.
LO6
19. Which of the following is not an approach appropriate for hedge
accounting?
a. Fair value hedge.

b. Straddle hedge.
c. Cash flow hedge.
d. Hedge of net investment in a foreign subsidiary.
LO7
20. If a financial instrument is classified as a cash flow hedge,
then
a. its gains or losses are represented in the income statement

if a year-end occurs before the settlement date.
b. it is classified as a held-to-maturity asset.
c. it does not require a notational amount.
d. its gains or losses are represented in the balance sheet if
a year-end occurs before the settlement date.

12-7
LO2
Exercise 1
On September 1, 20X5, Cormorant Company purchased merchandise from

Osaka Company of Japan for 20,000,000 yen payable on October 1, 20X5.
The spot rate for yen was $0.0079 on September 1 and the spot rate
was $0.0077 on October 1.
Required:
1. Did the exchange rate strength or weaken from September to October

and what are the implications for Cormorant’s business?
2. What journal entry did Cormorant record on September 1, 20X5?
3. What journal entry did Cormorant record on October 1, 20X5?
LO3
Exercise 2
On October 15, 20X5, Ibis Corporation, a French company, ordered

merchandise listed on the Internet for 20,000 Euros from Spoonbill
Corporation, a US corporation, which immediately accepted the order.
The Euro rate was $1.20 US on October 15. On November 15, 20X5
Spoonbill shipped the goods and billed Ibis the purchase price of
20,000 Euros when the Euro rate was $1.30 US. Ibis paid the bill on
December 10, 20X5. Three days later Spoonbill exchanged the 20,000
Euros for US dollars when the Euro rate was $1.28US.
Required:
Compute the foreign currency gains or losses on the December 31, 20X5
financial statements and show your calculations.
LO3
Exercise 3
On November 1, 20X3, the Penguin Corporation, a US corporation, purchased

an extruding machine from Shearwater Corporation, a UK company. The
purchase price was $10,000 and Penguin agreed to pay in pounds on February
1, 20X4. Both corporations are on a calendar year accounting period. Assume
that the spot rates for the British pound on November 1, 20X3, December 31,
20X3, and February 1, 20X4, are $1.60, $1.62, and $1.66, respectively.
Required:
Record the November 1, December 31, and February 1 transactions in the

General Journals of Penguin Corporation and Shearwater Corporation. If no
entry is required on a particular date, indicate “No entry” in the General
Journal.
12-8
LO4
Exercise 4
On November 1, 20X3, Petrel Corporation, a calendar-year US

corporation, invested in a purely speculative contract to purchase 1
million yen on January 30, 20X4, from the Karoke Trading Company, a
Japanese brokerage firm. Petrel agreed to purchase 1,000,000 yen from
Karoke at a fixed price of $0.0100 per yen. Karoke agreed to transmit
1,000,000 yen to Petrel on February 1, 20X4. The spot rates for yen
are:
Nov 01, 20X3 1 yen = $0.0097

Dec 31, 20X3 1 yen = $0.0103
Jan 30, 20X4 1 yen = $0.0106
The 30-day forward rate for yen on December 31, 20X3 was $0.0104.
Required:
Prepare the General Journal entries that Petrel would record on

November 1, December 31, and January 30.
LO4
Exercise 5
On November 1, 20X5, Albatross Corporation, a calendar-year US

corporation, invested in a purely speculative contract to purchase 1
million euros on January 30, 20X6, from Munich Company, a German
brokerage firm. Albatross agreed to purchase 1,000,000 euros from
Munich at a fixed price of $1.020 per euro. Munich agreed to transmit
1,000,000 euros to Albatross on January 30, 20X6. The spot rates for
euros are:
Nov 01, 20X5 1 euro = $1.015

Dec 31, 20X5 1 euro = $0.995
Jan 30, 20X6 1 euro = $1.010
The 30-day futures rate for euros on December 31, 20X5 was $1.005.
Required:
Prepare the General Journal entries that Albatross would record on

November 1, December 31, and January 30.

12-9
LO7
Exercise 6
0n June 1, 20X5, Stork Industries purchases an option contract for

$5,000 on 10,000 gallons of aviation gas to minimize its purchasing
cost price exposure. At the time, the market price is $2.50 per
gallon and the option price of $2 per gallon will expire 6 months
later. Stork can exercise the option at its discretion. When Stork
prepares quarter reports on June 30, the option is worth $4.50 and
Stork is still holding it.
On August 1, Stork exercises the option when the gas market price is
$5.00 per gallon and purchases 40,000 gallons of gas. On August 15,
Stork uses all of the gas on a charter flight.
Required:
What are Stork’s journal entries with regard to the aviation gas
option?
LO7
Exercise 7
On November 1, 20X5, US Pelican Company entered into a 90 day forward

contract of 200,000£ pounds to hedge a commitment to purchase special
equipment on February 1, 20X6 from a British firm Raven Inc. Assume
Pelican uses a 12% interest rate.
The relevant exchange rates are of dollars per pound:

Spot Rate Forward Rate
(for Feb 1, 20X6)
November 1, 20X5 1.32 1.35
December 31, 20X5 1.47 1.50
February 1, 20X6 1.55 -
Required:
1.What journal entry did Pelican record on November 1, 20X5?

2.What journal entry did Pelican record on December 1, 20X5?
3.What journal entry did Pelican record on February 1, 20X6 if the
purchase was made?

12-10
LO8
Exercise 8
On November 1, 20X3, Darter Corporation, a US corporation, purchased

from Jacana Corporation, a Mexican company, some machinery that cost
1,000,000 pesos. The invoice was payable in pesos on January 30,
20X4. To hedge against rapid changes in the peso, Darter entered into
a forward exchange contract on November 1, 20X3 with AB Trader &
Company, a US brokerage and investment firm. The contract specified
that AB Trader would sell 1,000,000 pesos to Darter at $0.102 per
peso for settlement on January 30, 20X4.
Assume that all three companies are subject to the same accounting
standards and have December 31st year-ends. The spot rates for pesos
on November 1, December 31, and January 30, are $0.100, $0.098, and
$0.107, respectively. The 30-day forward rate for pesos on December
31, 20X3 is $0.101.
Required:
Record General Journal entries for Darter Corporation on November 1,

December 31, and January 30. If no entry is required on a particular
date, indicate “No entry” in the General Journal.
LO8
Exercise 9
On November 1, 20X3, Gannet Corporation purchased 5,000 television

sets for its merchandise inventory from Seoul, a South Korean firm,
at a total quoted cost of 600,000,000 won (W). On this date, the spot
rate for won was $1 = 750W. On the same day, Gannet invested $900,000
cash in a non-interest bearing account with Tokyo, a Japanese bank,
to hedge its exposed liability position. The account payable to Seoul
is due on January 30, 20X4. The exchange rates on December 31, 20X3
and January 30, 20X4 were $1 = 730W, and $1 = 700W, respectively.
Gannet agreed to pay Seoul in won. Tokyo held the deposit in won but
will remit dollars back to Gannet on January 30th.
Assume that Gannet, Seoul and Tokyo are subject to the same
accounting standards and have December 31 year-ends.
Required:
Prepare all the journal entries for Gannet Corporation's General

Journal on November 1, 20X3, December 31, 20X3, and January 30, 20X4.
If no entry is required on a particular date, indicate “No entry” in
the General Journal.

12-11
LO8
Exercise 10
On November 1, 20X5, US Frigatebird Company sold an airplane worth $1

million Australian dollars to Australian company Heron Inc. to be
delivered on February 1, 20X6 in Sydney. In order hedge foreign
exchange, Frigatebird entered into a 90 day forward contract on the
same day for the amount of the sale at .73 US per Australian dollar.
The relevant exchange rates are of US dollars per Australian dollar:

Spot Rate
November 1, 20X5 .73
December 31, 20X5 .75
February 1, 20X6 .79
Required:
1.What journal entry did Frigatebird record on November 1, 20X5?

2.What journal entry did Frigatebird record on December 1, 20X5?
3.What journal entry did Frigatebird record on February 1, 20X6 if
the purchase was made?

12-12
SOLUTIONS
Multiple Choice Questions
1. a (198,000 krone/5.345 krone per dollar) = $37,043.97
2. b 30,000 x .67 = 20,100; $20,100 - $20,400 = $300 loss
3. c
4. b
5. c
6. d $78,000/.80 dollars per franc = 97,500

$78,000/.78 dollars per franc = 100,000
Difference in francs = (2,500)
Difference in dollars (2,500) x .78 = $ (1,950)
7. b $97,500 francs (from 6 above) x .78 = $76,050
8. d Account payable, Dec 05, 20X3

1,000,000 x $0.168 = $ 168,000
Account payable, Dec 31, 20X3
1,000,000 x $0.167 = 167,000
Gain $ 1,000
Account payable, Dec 31, 20X3 $ 167,000

Account payable, at settlement 167,500
Realized loss $ 500
9. b 150,000 pounds x (1.60 – 1.62) = $(3,000) loss
10. d 150,000 pounds x 1.62 = $243,000
11. b (220,000 kiwis)x($0.68) = $149,600
12. b (220,000 kiwis)x($.68 - $.70) = $4,400 loss
(To adjust the contract to the 30 day futures amount)
13. d
14. c
15. c
12-13
16. d
17. b
18. a
19. b
20. d

12-14
Exercise 1
Requirement 1
The foreign exchange rate weakened making the purchase of goods on

time cheaper from Japan.
Requirement 2 and 3
Date Account Name Debit Credit

9/01/X5 Merchandise 158,000
Accounts Payable: Osaka 158,000
10/01/X5 Accounts Payable: Osaka 158,000

FX gain 4,000
Cash 154,000
Exercise 2
A $1,042 foreign exchange loss
Spoonbill’s General Journal

10/15/X5 Accounts receivable 16,667
Sale 20,000/1.2 16,667
12/10/X5 No entry
12/13/X5 Cash 20,000/1.28 15,625

Foreign exchange loss 1,042
Accounts receivable 16,667

12-15
Exercise 3
Date Direct Method Indirect Method

Nov 01 1£ = $1.60 $1 = £.6250
Dec 31 1£ = $1.62 $1 = £.6173
Feb 01 1£ = $1.66 $1 = £.6024
Penguin’s General Journal

11/01/X1 Machinery 10,000
Accounts Payable: Shearwater 10,000
12/31/X1 Exchange Loss 125

Accounts Payable: Shearwater 125
(£6,250 x $1.62 = $10,125)

($10,000 - $10,125 = $125 loss)
02/01/X2 Exchange Loss 250

Accounts Payable: Shearwater 250
Accounts Payable: Shearwater 10,375

Cash 10,375
(£6,250 x $1.66 = $10,375)
Shearwater’s General Journal
11/01/X1 Accounts Receivable: Penguin 6,250

Sales Revenue 6,250
12/31/X1 No entry
02/01/X2 Cash 6,250

Accounts Receivable: Penguin 6,250

12-16
Exercise 4
Petrel’s General Journal
11/01/X1 Contract Receivable 10,000

Contract Payable 10,000
(1,000,000 x $0.0100)
12/31/X1 Contract Receivable 400

Exchange Gain 400
{1,000,000 x ($.0104 – 0.0100)}
01/30/X2 Contract Receivable 200

Exchange Gain 200
{1,000,000 x ($.0106 - .0104)}
Cash 10,600
Contracts Payable 10,000
Cash 10,000
Contract Payable 10,600
Exercise 5
Albatross’s General Journal
11/01/X3 Contract Receivable 1,020,000

Contract Payable 1,020,000
(1,000,000 x $1.020/euro)
12/31/X3 Exchange Loss 10,000

Contract Receivable 10,000
{1,000,000 x ($1.010 – $1.020)}
01/30/X4 Contract Receivable 5,000

Exchange Gain 5,000
{1,000,000 x ($1.015 - $1.010)}
Cash 1,015,000
Contract Payable 1,020,000
Cash 1,020,000
Contract Receivable 1,015,000

12-17
Exercise 6
Stork’s General Journal
6/01/X5 Aviation gas contract option 5,000

Cash 5,000
6/30/X5 Aviation gas contract option 20,000

Other comprehensive income 20,000
8/01/X5 Cash 30,000

Aviation gas contract option 25,000
Aviation gas 200,000

Cash 200,000
8/15/X5 Cost of goods sold 200,000

Aviation gas 200,000

Cost of goods sold 25,000

12-18
Exercise 7
Pelican’s General Journal
12/31/X5 Forward contract 29,703

OCI 29,703
(1.35-1.50)x200,000/(1.01)1
Implicit 1.32x200,000(1+r)3=1.35x200,000
rate r=0.007519
Discount Amortization Balance
264000
11/30 1985.04 265985
12/31 1999.97 267985
1/31 2015.00 270000
12/31/X5 Exchange Loss 1985.042+1999.968 3985

OCI 3985
02/01/X6 Forward contract 10,297

AOCI 10,297
Cash (1.55-1.35)x200,000 40,000

Forward contract 40,000
Equipment 310,000
Cash 310,000
Equipment 2015
OCI 2015

12-19
Exercise 8
Darter’s General Journal

11/01/X1 Machinery 100,000
Accounts Payable: 100,000
Jacana(pesos)
11/01/X1 Contract Receivable-pesos 102,000

Contract Payable:AB Trader 102,000
12/31/X1 Accounts Payable: Jacana(pesos) 2,000

Exchange Gain 2,000
12/31/X1 Unrealized Loss on Contract 1,000

Contract Receivable-pesos 1,000
{($.101 - $.102)(1,000,000)}
01/30/X2 Exchange Loss 9,000

Accounts Payable: 9,000
Jacana(pesos)

Unrealized Gain on Contract 6,000
Cash-pesos 107,000
Contract payable:AB Trader 102,000
Cash 102,000
Accounts Payable:Jacana(pesos) 107,000

Cash-pesos 107,000

12-20
Exercise 9
Date Direct Method Indirect Method

Nov 01 1W = $.001333 $1 = W750
Dec 31 1W = $.001369 $1 = W730
Jan 30 1W = $.001428 $1 = W700
GANNET’s General Journal
11/01/X1 Inventory 800,000

Accounts Payable: Seoul 800,000
(600,000,000/W750 per $1)
11/01/X1 Deposit Receivable: Tokyo 900,000

Cash 900,000
Value of deposit in won:

$900,000 x 750 won/ $1 =
675,000,000 won

Exchange Loss 21,918
Exchange Gain 24,658
Account Payable:
600,000,000/W730 = $821,918
$821,918 - $800,000 = $21,918
Deposit Receivable:
675,000,000/W730 = $924,658
$924,658 - $900,000 = $24,658

Exchange Loss 35,225
Exchange Gain 39,628
Account Payable:
600,000,000/W700 = $857,143
$857,143 - $821,918 = $35,225
Deposit Receivable:
675,000,000/W700 = $964,286
$964,286 - $924,658 = $39,628

12-21
01/30/X2 Accounts Payable: Seoul 857,143
Cash 857,143
01/30/X2 Cash 964,286

Deposits Receivable: Tokyo 964,286
Exercise 10
Frigatebird’s General Journal
11/1/X5 Accounts receivable 1,369,863

Sales 1,369,863
12/31/X5 Exchange rate loss 36,530

1,369,863-1,333,333=36,530

Exchange rate gain 36,530
02/01/X6 Exchange rate loss 67,510


Exchange rate gain 67,510
1,333,333-1,265,823=67,510
Cash 1,369,863
Accounts receivable 1,265,823

12-22

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Chapter 12 Test Bank

FOREIGN CURRENCY CONCEPTS AND TRANSACTIONS

Multiple Choice Questions

©2009 Pearson Education, Inc. publishing as Prentice Hall

Jun 1 1$AUS = $.71US

This chart shows a

a. strengthening Australian Dollar which makes it less

a. The current cross rate between two currencies.

©2009 Pearson Education, Inc. publishing as Prentice Hall

On November 1, 20X3, Magpie Corporation sold merchandise to William

a. credit to Accounts Receivable for $76,050.

a. debit to Cash for $78,000.

a. $(1,000) and $500.

©2009 Pearson Education, Inc. publishing as Prentice Hall

On October 2, 20X4, Duck Corporation borrowed 150,000 British pounds

October 2, 20X4 $1.60

Use the following information for questions 11 and 12.

On November 2, 20X5, Swan Corporation entered into a 90-day contract

©2009 Pearson Education, Inc. publishing as Prentice Hall

a. debit to Contract Receivable denominated in kiwis for

a. If the contract is a hedge of a net asset position.

a. less than the current spot rate.

©2009 Pearson Education, Inc. publishing as Prentice Hall

a. It has one or more underlyings and one or more notational

a. An importer will want to hedge his foreign denominated

©2009 Pearson Education, Inc. publishing as Prentice Hall

a. Critical term analysis.

a. Fair value hedge.

a. its gains or losses are represented in the income statement

©2009 Pearson Education, Inc. publishing as Prentice Hall

On September 1, 20X5, Cormorant Company purchased merchandise from

1. Did the exchange rate strength or weaken from September to October

On October 15, 20X5, Ibis Corporation, a French company, ordered

On November 1, 20X3, the Penguin Corporation, a US corporation, purchased

Record the November 1, December 31, and February 1 transactions in the

On November 1, 20X3, Petrel Corporation, a calendar-year US

Nov 01, 20X3 1 yen = $0.0097

Prepare the General Journal entries that Petrel would record on

On November 1, 20X5, Albatross Corporation, a calendar-year US

Nov 01, 20X5 1 euro = $1.015

Prepare the General Journal entries that Albatross would record on

©2009 Pearson Education, Inc. publishing as Prentice Hall

0n June 1, 20X5, Stork Industries purchases an option contract for

On November 1, 20X5, US Pelican Company entered into a 90 day forward

The relevant exchange rates are of dollars per pound:

1.What journal entry did Pelican record on November 1, 20X5?

©2009 Pearson Education, Inc. publishing as Prentice Hall

On November 1, 20X3, Darter Corporation, a US corporation, purchased

Record General Journal entries for Darter Corporation on November 1,

On November 1, 20X3, Gannet Corporation purchased 5,000 television

Prepare all the journal entries for Gannet Corporation's General

©2009 Pearson Education, Inc. publishing as Prentice Hall

On November 1, 20X5, US Frigatebird Company sold an airplane worth $1

The relevant exchange rates are of US dollars per Australian dollar:

1.What journal entry did Frigatebird record on November 1, 20X5?

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Multiple Choice Questions

1. a (198,000 krone/5.345 krone per dollar) = $37,043.97

2. b 30,000 x .67 = 20,100; $20,100 - $20,400 = $300 loss

6. d $78,000/.80 dollars per franc = 97,500

Difference in dollars (2,500) x .78 = $ (1,950)

7. b $97,500 francs (from 6 above) x .78 = $76,050

8. d Account payable, Dec 05, 20X3