Exercise 1: Foreign Currency Transaction

Exercise 1 Fc Transactionexercise 1 Foreign Currency Transaction

Exercise 1 - FC Transaction Exercise 1 - Foreign Currency Transaction - Selling 2ManyMice Co., a domestic wholesaler who prepares monthly financial statement in U.S.$, sold merchandise to a British customer, with the transaction to be denominated in British Pounds (£). Relevant information and spot rates for this transaction are as follows: Sold £ 200,000 of merchandise with a cost of $75,000 on July 1, 2017 payable in full September 10th, 2017. Spot Rates July 1st, £ = $1.45 August 31st, £ = $1.38 Sept. 30th £ = $1.47 July 31st, £ = $1.35 Sept. 10th, £ = $1.42 December 31st £ = $1.43 Prepare the journal entries required on the books of 2ManyMice Co. to account for this transaction by selecting the proper date and accounts for each entry using the drop down menus in the gray cells, and entering the proper debit / credit amounts in the gray cells. When correct, cells will change colors. 7/1/17 Accounts Receivable 7/31/17 Cash Date Account Debit Credit 8/31/17 Cost of Goods Sold 9/10/17 Foreign Exchange Gain 9/30/17 Foreign Exchange Loss 12/31/17 Inventory Sales Exercise 2 - FC Transaction Exercise 2 - Foreign Currency Transaction - Buying ACME Machinery Co., a domestic manufacturer who prepares monthly financial statement in U.S.$, purchased component parts from a European supplier, with the transaction to be denominated in Euros. Relevant information and spot rates for this transaction are as follows: Purchased € 750,000 of component parts on January 1, 2017 payable in full April 15th, 2017. Spot Rates January 1st, € = $1.05 February 28th, € = $1.15 April 15th, € = $1.02 January 31st, € = $1.10 March 31st, € = $1.08 April 30th, € = $1.04 Required: Prepare the journal entries required on the books of ACME Machinery Co. to account for this transaction. Date Account Debit Credit 1/1/17 Accounts Payable 1/31/17 Cash 2/28/17 Foreign Exchange Gain 3/31/17 Foreign Exchange Loss 4/15/17 Inventory 4/30/17 Exercise 3 - FC Translation Exercise 3 - Foreign Currency Translation OhMyNose Inc. is the 100% owner of a European-based subsidiary, BlackEye Inc. BlackEye Inc. was acquired by OhMyNose Inc. on January 1, 2016. Information regarding this acquisition is as follows: Relevant information regarding the books of BlackEye Inc.: Capital Stock January 1st, 2016 € 150,000 Retained Earnings January 1st, 2016 € 200, Net Income € 150,000 Selected exchange rate information is as follows: January 1st, 2016 Spot Rate 1 € = $1.35 January 1st, 2017 Spot Rate 1 € = $1.24 Full-Year 2016 Average Rate 1 € = $1.28 Full-Year 2017 Average Rate 1 € = $1.18 December 31st, 2016 Spot Rate 1 € = $1.25 December 31st, 2017 Spot Rate 1 € = $1.12 Required: Given the following 12/31/2017 trial balance of BlackEye Inc., calculate the translated trial balance and the accumulated translation adjustment by selecting the proper conversion rate for each item in the gray shaded cells using the drop down menu, and then calculate the U.S. $ amount and enter into the gray shaded cells on the right. When correct, the cells will change color. Note: Do not copy formulas down in the U.S. $ Trial Balance column as doing so will overwrite the "change color when right" formatting). Account Trial Balance in Euros Rate to Convert At U.S. $ Trial Balance Cash € 200,.12 Accounts Receivable € 150,.18 Inventory € 300,.24 Land € 25,.25 Building (net) € 300,.28 Equipment (net) € 250,.35 Patent € 100,000 N/A Accounts Payable (€ 250,000) Notes Payable (€ 400,000) Capital Stock (€ 150,000) Retained Earnings (€ 200,000) Sales (€ 750,000) Cost of Goods Sold € 300,000 Other Expenses € 125,000 Total € 0 $0 Exercise 4 - Rodgers CPA Quiz Exercise 4: Rodgers CPA Review "Interactive Practice Quiz" As part of your registration for this course, each student is given access to the Rodgers CPA Review website, a great resource for both lecture material and review / expectation of the actual CPA exam. For our course, we're going to be utilizing Rodgers' "Interactive Practice Quizzes". The "Interactive Practice Quizzes" are a great resource for developing an understanding of the material at hand - they are not intended to be assessments. When taking an "Interactive Practice Quiz" you have the ability to draw from resources on the website to develop an understanding of the material in order to answer the questions. In certain sections of our class, you're going to be asked to answer the multiple choice questions within specific sections of Rodgers CPA Review "Interactive Practice Quizzes". Below will be specific instructions on which area to work on, and what you need to complete and post up on this page to demonstrate your participation in these activities. In week #5 of this class we'll be covering segment reporting and foreign currency transactions & translations, which align to the FAR 21 and FAR 6 sections in Rodgers CPA Review, respectively. There are "Interactive Practice Quizzes" for FAR 21 and FAR 6 which contains approximately 30 questions each. For week #5, you'll be working through these "Interactive Practice Quizzes". For week #5, you will be required to have attempted at least 20 questions in each of the FAR practice quizzes of the multiple choice questions in the FAR 21 Segments and FAR 6 Foreign Operations "Interactive Practice Quizzes" and successfully answer at least 15 in each one (more are always welcome!). To complete this week's requirement, attempt at least 20 questions in each FAR with at least 15 correct responses each, and then take screen shots of your completion summaries for each section. Insert the screen shots below and simply submit with this file when uploaded this completed homework assignment. STAT 350 (Spring 2017) Homework 4 (20 points) 1 Practice Problems: 5.71 (p.221), 5.73 (p.221), 5.75 (p.221), 5.79 (p. pts.) 1. In Illinois, a typical DUI (Driving Under the Influence) offender is a 34-year-old male, arrested between 11 p.m. and 4 a.m. on a weekend, and has a BAC (blood alcohol content) of 0.16. Eighty-five percent of all drivers arrested in Illinois for driving under the influence are first-time offenders (it is their first time being arrested for DUI). Suppose 40 people arrested for DUI in Illinois are selected at random. (1 pt.) a) What is the probability that exactly six people are repeat offenders (they are NOT first-time offenders)? (1 pt.) b) What is the probability that at least two people are repeat offenders? (include at least 3 decimal places in your answer) (0.5 pt.) c) What is the mean of the number of repeat offenders that are arrested? (0.5 pt.) d) What is the standard deviation of the number of repeat offenders that are arrested? Additional Problems: 5.87, 5.93, 5.95 Practice Problems: 5.109 (p. pts.) 2. Buchtal, a manufacturer of ceramic tiles, reports on average 3.9 job-related accidents per year. Accident categories include trip, fall, struck by equipment, transportation, and handling. The number of accidents is approximately Poisson. (1 pt.) a) What is the probability that there are exactly 3 accidents in a year? (0.5 pt.) b) Suppose a half-year is randomly selected. What is the expected number of accidents in this time period? (0.5 pt.) c) What is the standard deviation of the number of accidents in half a year? (1 pt.) d) If the number of accidents is more than 2 in a half-year, the company insurance carrier will raise the rates.

What is the probability of an increase in the company’s insurance bill?? Additional Problems: 5.119, 5.121 Practice Problems: 6.1 (p.252), 6.3 (p. pts.) 3. Determine if each of the following functions are legitimate density curves. Please graph or sketch each one. (1 pts.) a) f(x) = − ð‘¥2) for 0 pts.) 4. The following function is a density function where k is a constant: f(x) = k(x2 + 3) for -1

What is the value of k? STAT 350 (Spring 2017) Homework 4 (20 points) .5 pts.) 5. The following function is a legitimate density function: ð‘“(ð‘¥) = ð‘¥ for 2

Paper For Above instruction

This comprehensive analysis explores the intricacies of foreign currency transactions and their impact on financial reporting. It covers the journal entries necessary for transactions involving foreign currencies, the translation process of foreign subsidiaries, and the use of currency exchange rates. Additionally, the discussion includes practical applications through various exercises, illustrating how companies handle exchange rate fluctuations, translate foreign financial statements, and account for translation adjustments within consolidated financial reports. The importance of understanding currency translation methods and their relevance to international business operations is emphasized, alongside practical examples and standard procedures for accurately recording and reporting foreign currency transactions in compliance with accounting standards.

The first section delves into foreign currency transactions, illustrating journal entries for sales and purchases denominated in foreign currencies, with attention to spot rates and exchange gains or losses recognized due to currency fluctuations. For example, the sale of British Pounds by a U.S. company demonstrates how to record accounts receivable, cash collections, and foreign exchange gains or losses when exchange rates vary between the transaction date and settlement date. Similar procedures are shown for purchasing components from a European supplier, including the initial recording of accounts payable and the subsequent adjustments for exchange rate changes at each reporting period.

The second section discusses foreign currency translation, focusing on the consolidation of foreign subsidiaries' financial statements. It highlights the application of different translation methods, such as the current rate method, and the determination of appropriate exchange rates for various balance sheet and income statement items based on their nature and relevant accounting standards (e.g., ASC 830). The process involves translating assets, liabilities, equities, revenues, and expenses at appropriate rates, and recording any resulting translation adjustments in the accumulated other comprehensive income or a separate translation adjustment account.

Furthermore, the discussion illustrates the conversion process through specific examples, including the translation of trial balances for foreign subsidiaries and the computation of the resulting translation adjustments. The analysis underscores the importance of proper exchange rate selection, accurate computations, and compliance with accounting standards to ensure the financial statements correctly reflect the economic realities of international operations.

Additionally, the document briefly reviews related topics such as the use of currency exchange rate information to assess risks, the impact of translation adjustments on financial statements, and the integration of foreign currency considerations into global financial reporting strategies. The use of practical exercises provides hands-on experience in translating and recording foreign currency transactions, reinforcing theoretical knowledge with real-world application.

References

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