Problem -
Doering Company, a U.S. corporation with customers in several foreign countries, had the following selected transactions for 2015 and 2016.
2015
Apr. 8 Sold merchandise to Salinas & Sons of Mexico for $24,234 cash. The exchange rate for pesos is $0.1080 on this day.
July 21 Sold merchandise on credit to Sumito Corp. in Japan. The price of 2.9 million yen is to be paid 120 days from the date of sale. The exchange rate for yen is $0.0081 on this day.
Oct. 14 Sold merchandise for 18,300 pounds to Smithers Ltd. of Great Britain, payment in full to be received in 90 days. The exchange rate for pounds is $1.5125 on this day.
Nov.18 Received Sumito's payment in yen for its July 21 purchase and immediately exchanged the yen for dollars. The exchange rate for yen is $0.0076 on this day.
Dec.20 Sold merchandise for 18,300 ringgits to Hamid Albar of Malaysia, payment in full to be received in 30 days. On this day, the exchange rate for ringgit is $0.6825.
Dec. 31 Recorded adjusting entries to recognize exchange gains or losses on Doering's annual financial statements. Rates for exchanging foreign currencies on this day follow.
Pesos (Mexico) $ 0.1092
Yen (Japan) 0.0080
Pounds (Britain) 1.5179
Ringgits (Malaysia) 0.6780
2016
Jan. 12 Received full payment in pounds from Smithers for the October 14 sale and immediately exchanged the pounds for dollars. The exchange rate for pounds is $1.5258 on this day.
Jan. 19 Received Hamid Albar's full payment in ringgits for the December 20 sale and immediately exchanged the ringgits for dollars. The exchange rate for ringgits is $0.6744 on this day.
1. Prepare journal entries for the Doering transactions and adjusting entries
Sold merchandise to Salinas & Sons of Mexico for $24,234 cash. The exchange rate for pesos is $0.108 on this day.
Sold merchandise on credit to Sumito Corp. in Japan. The price of 2.9 million yen is to be paid 120 days from the date of sale. The exchange rate for yen is $0.0081 on this day.
Sold merchandise for 18,300 pounds to Smithers Ltd. of Great Britain, payment in full to be received in 90 days. The exchange rate for pounds is $1.5125 on this day
Received Sumito's payment in yen for its July 21 purchase and immediately exchanged the yen for dollars. The exchange rate for yen is $0.0076 on this day.
Sold merchandise for 18,300 ringgits to Hamid Albar of Malaysia, payment in full to be received in 30 days. On this day, the exchange rate for ringgit is $0.6825.
Record adjusting entry to recognize exchange gains or losses related to pounds (Britain), The exchange rate for pounds (Britain) is $1.5179 on December 31, 2015.
Record adjusting entry to recognize exchange gains or losses related to ringgits (Malaysia), The exchange rate for ringgits (Malaysia) is $0.678 on December 31, 2015.
Received full payment in pounds from Smithers for the October 14 sale and immediately exchanged the pounds for dollars. The exchange rate for pounds is $1.5258 on this day.
Received Hamid Albar's full payment in ringgits for the December 20 sale and immediately exchanged the ringgits for dollars. The exchange rate for ringgits is $0.6744 on this day.
2. Compute the foreign exchange gain or loss to be reported on Doering's 2015 income statement
November 18 December 31 December 31 Total