CHAPTER 18

Exercise 1
a) From the viewpoint of the US enterprise the expression used is the direct quotation.

b) (50,000 x .0156)= 790

Exercise 2
11/15 Equipment 350,000
AP 350,000
11/20 AP 350,000
Forex Loss 23,333
NP (14,000/.0375) 373,333
Bank Charges 5,000
Cash 5,000
12/31 NP 62,222
Forex gain 62,222
Interest Expense 6,377
Interest Payable 6,377
(14,000 x.18 x 41/360)=287 /045=
311,111-373,333

1/19 Forex Loss 18,301
NP 18,301
14,000/.0425=329,412-311,111

Forex Loss 376
Int.Payable 376
287/.0425=6,753-6378
NP 329,412
Int Payable 6,753
Int. Exp. 3,129
14,000 x .18 x 19/360= 133/.0425
Cash (329,412 + 9882) 339,294

Exercise 3
12/15 NR 150,000 x .0390 5,850
Sales 5,850
12/31 Int. Rec. 29.25
150,000 x .12 x 16/360=800 x .03925
Int. Income 29.25
NR 37.50
Forex Gain 37.50
150,000 (.0390-.03925)
1/14 NR 37.50
ForexGain 37.50
150,000 (.0395-.03925)
Int. Rec. 2.35
Forex Gain (31.60-29.25) 2.35
Cash (151,500x.0395) 5,984.25
NR 5,925.00
Int. Rec. 31.60
Int. Income 27.65
Exercise 4
1/23 Marginal Deposit 210,040
Bank Service Charge 10,502
Cash 220,542
2/23 Purchases 412,620
Acceptance Payable 412,620
Acceptance Payable 412,690
Marginal Deposit 210,040
Cash 202,650

Exercise 5
12/23 Equipment (50T x 6.1098) 305,490
59

110 Accounts Payable 8.490 Liability for Forward Contract 330.675)50.031) 160 9/5 Forex Gain or Loss 280 Accounts Payable (.640 Gain on Currency Exchange 40 Exercise 8 11/23 Accounts Receivable (.380 FC due from Broker 317.680 Foreign Currency Due Fr Broker (.0335) 280 Liability for Forward Contract 2.240 Foreign Currency Due From Broker 2.275 x 50 313.435-6.275-6.000 Liability for Forward Contract 330.490-317.000 (330.943 Due From Broker (1 m x .030-.008558) 8.380) If No Hedging P11.0335) 2.480 Due to Broker 2.375 FC due from Broker 16.380 Loss minimized by P25.000 Exercise 7 8/6 Merchandise (.558 12/31 Forex Gain or Loss 32 Accounts Receivable (.490 Cash 317.558 Liability for Foreign Currency 8.630 Cash (6.943 Sales 7. Accounts Payable 305.033) 2.740 W/ Hedging P25.260 2/6 Forex Loss 16.007943 x 1M) 7.030-.1098)50T 8.033-.375 (63.490 12/31 Forex Loss(6.490 12/31 FC due from Broker 3.3476 x 50T) 317.07943) 1M 32 60 .480 Foreign Currency (.007911-.750 Forex Loss 3.240 Accounts Payable 2.480 Cash (.028) 160 Accounts Payable 160 Foreign Currency Due from Broker 160 Forex Gain or Loss (.110 2/06 Accounts Payable (6.490 Cash 330.480 .031 x 80T 8/31 Forex Gain or Loss (.380 Exercise 6 12/23 Foreign Currency Due from broker 330.031) 2.028 x 80T) 2.260 Forex Gain 3.

008382) 1M 176 1/22 Loss on Currency Exchange 31 Accounts Receivable (.000 Cash 135. Liability for Foreign Currency Sold 176 Forex Gain or Loss (.880 Forex Gain 502 Cash 8.000 5/30 Due to Broker 25.750 Investment in Foreign Currency 24.500 Forex Gain 250 Exercise 11 12/1 Foreign Currency Receivable 135.007911-.382 Loss on Currency Exchange 25 Foreign Currency 7.00788) 31 Liability for Foreign Currency Sold 8.100 Accounts Payable 136.612-.000 Due to Broker (100T x .000 Investment in Forward Contract 1.000 Liability for Forward Contract 135.900 Foreign Currency Receivable 136.000 Change in Value 1.000 Cash 25.008558-.245 x 100T) 24.25-.000 Gain on Currency Exchange 500 Exercise 10 6/15 Cash 24.000 Gain on Forward Contract (.558 Exercise 9 3/31 Investment in Forward Contract 25.608) 1.558 Due From Broker 8.000 Forex Gain or Loss 1.25) 25.000 Foreign Currency 136.100 Forex Gain 800 Accounts Payable 136.000 1/30 Foreign Currency Receivable 100 Foreign Currency Receivable 100 Forex Loss 100 Change in Value 100 Purchases 135.000 Cash (.100 Forex Loss 800 Foreign Currency 136.100 3/2 Liability for Forward Contract 135.24)100T 1.000 Change in Value of Purchase Commitment 1.500 Investment in Forward Contract 24.000 4/30 Loss on Investment (.000 12/31 Foreign Currency Receivable 1.900 Exercise 12 61 .

500) 3.000 x 4.15 ________ 345.226.960 Share Capital (1.000+360.800.000 Notes Payable 2.750.200 7.000 (4.000 Depreciation 150.000) = P11.400.200 NCI 798.760 Dividends. (48.000-23.857 105 Acc.000 1.200 7.000 Accounts Receivable 300.230.15 172. a) TRIAL BALANCE SEA CORPORATION Dec 31.000 x 225-105) x 48 2.461. 2010 Rands Dollars Cash 62.226.571) 105 3.000 1. Sea 9.000 Revenues 300.200 172.330.000 1.200 e) Income from Subsidiary 9.000x.000 (4.000.900. Hyper Accts Recble 480.000 SHE (800. Sea 9.500 Investment 3.000 480.20 360.000 Airplanes 5.500 2.200 Investment in Stocks.000 1.000 Retained Earnings 1/1 2.000 Dividends 20.634. Dep.200 Income from Subsidiary 9.20 36.000x.000 Goodwill 861.200 b) Net Income (34.000.5) a.000+6.576.80 800.000 720.000 Inventories 240.000 Transaction Adjustment ________ 1.000.000 Accumulate Depreciation 30.000.000 1.000-360.000 3.20 744.600.000 x 225-105) x 48 (548.000 1.800 515.000 7.200 861.700 6.500 c) Assets (744.20 6.000.300 Table: 100% 80% 20% 3.193.000 1.400.8) 800. 1.000 2.437.360. Not hyper b.230.000 Retained Earnings 2. 1.060.330.000 687.286 Exercise 13 b.800 Translation Adjustment 1.700+11.744.000 x 4.117. a.300 62 .461.000 Total 6.220. Sea Corp.20 2.15 161.000+2.000) (10.461.500 (3.400.000 Capital Stock 1.000 1.000 240.000 Building 2.000 1. 18.235.000) = P6.500-172.000 Notes Recble 720.000 2.500-161.40) Exercise 14.330.000 (50.000.760.000 .185 23.200 d) Investment in Stocks.200 6.000.8) 2.742.500 689.000 Notes Payable 2.500 Other Expenses 140.

000 Expenses (312.600 1.000 _______ b)224.600 Translation Adj.000 Notes Receivable 224.150.000 300. 31 583.200 (11.350.350.888. 1 @ .27 27.600 Total 520.700-11.000 120.200 343.26 1.000 Other Assets @ .560.000) (276.000 220.27 1.000 274.000 240.000 Common Stock @ .000) ( 588.200 780.000 Decrease in RE (23.226.088.00 Current Liabilities Long Term Debt @ .000 Add Net Income 520.215.040.600 1.000 b)240.26 1.200 Minority Interest ________ ________ 13.500) (12.000 63 .000 Total Assets 1.000 Allowance ( 25.400 1.214.200 72.800 ( 13.000 1.000 Cost of Expenses @ .800 688.000 Accounts Receivable 250.000 Liabilities and Stockholder’s Equity 60.000 Airplanes 750.000 16.600 400.000-2.200 Retained Earnings Beginning Balance 400.000 Statement of Retained Earnings Balance.000 ________ 16.000 Net Income 688.25 225.200 47.000 68.000 Plant Assets (net) @ .400 66.000 1.25 405.088.130.000 Net Assets End (6.000 c) 266.000 600.27 54.200) Translation Adjustment P1.000 Paid In Excess of Par @ .000 Retained Earnings 62.200 Financial Position: Cash 133. Year 7 Income Statement Net Sales @ . Jan.000 1.350.000 84.608.290.600 84.888.800) ________ Ending Balance 1.000) 4.27 162.000 570.200 69.000 Balance Sheet Current Assets @ .000 205.400 570.000 c) 64.744.000 Capital Stock 300. 3.000) Subsidiary Income 55.000) Investment In Sea c)268. Net Assets Beg.000 780.400 68.000 Net Income 520.200 Notes Payable 220.400.27 81.000 Balance Dec.000 688.25 125.000 Increase in Net Assets 1.200 VENEZUELA INVESTE Transaction of Financial Statement May 31.000 1.800) Net Income 688.000 ________ Total 1.000 Accumulated Translation Adjustment 583.000 a)(59000)47200 13.000 80.000 Less Dividends @ .000 345.000) ( 12.344.200 Exercise 15 American Sea Debit Credit NCI Consolidated Income Statement Revenues 945. _______ 117.000 745.200 69.000 Retained Earnings 150.000) ( 37.000 370.

7.000 1.000.00175 = 8.00 = P29.000 1.090 1.000 Answer A 9.00182) x 5.000 1.090 7. Answer C 64 .00182 x 5.000 103.MULTIPLE CHOICE 1. 240.000 Answer: C Gain (.750 Answer: C 2) 5.74 .00175 .621 = P447. Answer A 11.602.000 0 6.281.000 = 9.22 = 44. 36.00 1.594 Answer: D 2.200 ________ 718.000 1.000 Retained Earnings 45..000 ______ 1.037.200.75 122.400 Accounts Receivable 113.000 Answer: C 3.90 190.000 = 9.68 13.1302136 . – Plant & Equip.040 3) Answer: E 361.68 149.500 Dividends 40.950 Revenues 350.68 189.000 x 43 = P828..000.100 Answer: B 2) . 1) 5.68 92.000 = 500 Answer: B 4.840 Inventories 89.000 Answer: D 3) (.000 718..00185) x 5.000 = 150 Answer: C 5.640 Common Stock 100.000 1.000 1.000 x .75 381.000 Other Expenses 70.000 x .000 1.000 Answer: D 3) (.000 1.000 1.000 1.72) x 50.72) x 50.680 1.00185 .281.000 = 1.118375) X 2.000 x . (.090 Translation Adjustment _______ ______ 243.410 ________ Totals 718.000 1.75 612. 1) .000 36.000x.500. 200. Ranchero Problem 1) Answer: B 2) Answer: E 635.0018 = 9.83 73.000.000 Answer: E Loss 1.200 In Pounds Translation In Dollars Trial Balance Debit Credit Debit Credit Cash 55.281.000.520 Plant & Equipment 129.75 7. Depn. (.120 Answer A 10.68 80.560 Long Term Debt 48..74 .500 Cost of Good Sold 218.000.000 1. 8.440 Current Liabilities 167.0018 x 5.000 Answer: B 8.00175) x 5.000.000 / 6 = 40..00 = 350 Answer: A 4) (.000 718.68 216.000 1.5 = P1.. Answer A 12.000 x 44.000 = 1.500 Depreciation 4.000.000/10 = 720.720 Accum.68 280.00182 .

65 .