MQ2 ADVAC3 PROBLEMS FCT

Luna Moonface (a Filipino Company) sells moon-shaped jewelries for export. She purchased the gems
from a remote place in Equatorial Guinea last August 23, 2018 for 350,000 Bipkwele. Materials were
purchased from Thailand were valued at 938,100 in its equivalent pesos on the date of purchase, which
is September 10, 2018. A Resort in Malaysia placed an order for 238,000 Ringgit last October 2, 2018 for
delivery on October 15, 2018. Also, a jeweller in Vietnam placed an order for 458,000 in its equivalent
pesos last October 15, 2018 for Delivery on December 10, 2018. All payables are due on March 10, 2019
while receivables are to be collected on March 25, 2019. Except for the order from Vietnam,
transactions are to be settled on the currency other than Luna Moonface’s reporting currency. Luna
Moonface had cash available on February 20, 2019 and decided to pay the amount due to the supplier
in Equatorial Guinea. The following are the conversion rates:

Country (Currency) Aug. 23 Sept. 10 Oct. 02 Oct.15 Dec.10 Dec.31 Feb.20 Mar.10 Mar.25
E. Guinea (Bipkwele) 15.30 15.80 16.30 15.70 16.20 16.90 17.10 16.50 16.30
Thailand (Baht) 1.37 1.59 1.44 1.60 1.54 1.70 1.67 1.54 1.43
Malaysia (Ringgit) 13.43 13.89 13.98 14.21 14.53 14.87 15.45 15.89 16.54
Vietnam (Dong) 12.33 12.54 12.43 12.98 13.12 12.65 13.55 13.98 14.23

1. How much foreign currency transaction gain or loss would be recorded on December 31, 2018?
2. How much foreign currency transaction gain or loss should be recognized in 2019 for all the
transactions?
3. Prepare all necessary journal entries for 2018 and 2019? (in chronological order)

The accounts of Rockets International, a Philippine corporation, show P81,300 accounts receivable and
P39,000 accounts payable at December 31, 2018, before adjusting entries are made. In analyzing the
balances reveals the following:
Accounts Receivable:
Accounts Receivable in Phil. Pesos P28,500
Receivable denominated in 20,000 foreign currency 1 11,800
Receivable denominated in 25,000 foreign currency 2 41,000
Total P81,300

Accounts Payable:
Payable denominated in Phil. Pesos P 6,950
Payable denominated in 10,000 foreign currency 3 7,600
Payable denominated in 10,000 foreign currency 2 24,450
Total P39,000

Current exchange rates for foreign currency 1, foreign currency 2, and foreign currency 3 at December 31,
2018 are P.66, P1.65 and P.70, respectively.

4. Determine the net exchange gain or loss that should be reflected in Rocket’s income statement
for 2018 from year-end exchange adjustments.
5. Determine the amounts at which the accounts receivable should be included in Rocket’s
December 31, 2018.
6. Determine the amounts at which the accounts payable should be included in Rocket’s December
31, 2018.
MQ2 ADVAC3 PROBLEMS FCT