Question

Exercise C-16A Foreign currency transactions LO C3 Leigh of New York sells its products to customers in the United States and the United Kingdom. On December 16, 2017, Leigh sold merchandise on credit to Bronson Ltd. of London at a price of 40,000 pounds. The exchange rate on that day for £1 was $2.0199. On December 31, 2017, when Leigh prepared its financial statements, the rate was £1 for $2.0138. Bronson paid its bill in full on January 15, 2018, at which time the exchange rate was £1 for $2.0159. Leigh immediately exchanged the 40,000 pounds for U.S. dollars. Prepare Leigh's journal entries on December 16, December 31, and January 15. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) View transaction list Journal entry worksheet < 1 2 3 On December 16, 2017, Leigh sold merchandise on credit to Bronson Ltd. of London at a price of 40,000 pounds. The exchange rate on that day for E1 was $2.0199

Answer 1

Journal Entries

Date	Particulars	Debit ($)	Credit ($)
December 16, 2017	Accounts Receivable	80796
	To Sales		80796
	(Being goods sold by Leigh on credit to Bronson for 40000 pounds at exchange rate of 2.0199 for 1 pound) 40000 pounds X $2.0199 = $80796
December 31, 2017	Foreign exchange loss	244
	To Accounts receivable		244
	(Being Accounts receivable undervalued due to difference in exchange rates for date of transaction and date of preparation of financial statements) 40000 pounds X ($2.0199 - $2.0138) = $244
Jan 15, 2018	Cash	80636
	To Accounts receivable		80552
	To Foreign exchange gain		84
	(Being Dues from Bronson received and difference in exchange rated between date of financial statements and date of receipt recognized as Foreign exchange gain) 40000 pounds X ($2.0159- $2.0138) = $84