Question

g "Barter Corp. sold American telecommunications equipment to a British company for 710,000 pounds. On the sale date, the exchange rate was $1.65 per British pound, but when Barter received payment from its customer, the exchange rate was $1.60 per pound. When the foreign receivable was collected, Barter Enterprises:"

Answer 1

Debited Cash of $1,136,000

Debited Loss on Fluctuation of Foreign Currency for $35,500

Step-by-step explanation:

Calculation for when the foreign receivable was collected, Barter Enterprises

We are going to first calculate for the date when Barter received the payment.

On the date when Barter received payment, they will received :

710,000 *$1.60 = $1,136,000

Therefore On the date when Barter received payment, they had debited Cash of $1,136,000

We are going to calculate for Loss on Fluctuation of Foreign Currency

= (710,000 *$1.60) - (710,000 *$1.65)

=$1,136,000-$1,171,500

= $35,500

Therefore they as well had Debited Loss on Fluctuation of Foreign Currency for $35,500