Professional Documents
Culture Documents
Income ₱7M
Expenses (4M)
Profit ₱3M
Customer A
7/15/x6 Sold merchandise for 50,000 pound to Syrian
Wholesaler Syrian Pound P 0.95
7/20/x6 Received 20% payment 0.90
7/30/x6 Received remaining amount owed 0.91
4. What is the capitalized cost of inventory purchase from the Pakistan wholesaler? _________________
5. What is the foreign exchange gain or loss on July 10, 20x6 transaction arising from the Pakistan wholesaler? ________________
6. What is the foreign exchange gain or loss on July 31, 20x6 transaction arising from the Pakistan wholesaler? ________________
7. What is the reportable sales amount in the income statement in 20x6? ________________
8. What is the foreign exchange gain or loss on July 20, 20x6 transaction arising from the Syrian wholesaler? _______________
9. What is the foreign exchange gain or loss on July 30, 20x6 transaction arising from the Syrian wholesaler? _____________
10. Hunt Co. purchased merchandise for £300,000 from a vendor in London on November 30, 20x6. Payment in British pounds was
due on January 30, 20x7. The exchange rates to purchase one pound were as follow:
In its income statement, what amount should Hunt report as foreign exchange transaction gain (loss)? ________________
11. On July 1, 20x6, Magnolia Company purchases 1,000 pounds of chocolate for 50,000 foreign currencies (FCS), payable in 60 days.
On July 1, a FC is worth P 27.29; by August 30, the day of payment, the FC is worth P 27.00. The 60-day forward rate on July 1 is 1 FC
= P 28.00. Magnolia Company should record the cost of the chocolate as: _________________
12. The accounts of Ilocano International, a Philippine corporation, show P 81,300 accounts receivable and P 38,900 accounts payable
at December 31, 20x6, before adjusting entries are made. In analyzing the balances reveals the following:
Accounts receivable:
Accounts receivable in Philippine pesos P 28,500
Receivable denominated in 20,000 foreign currency 1 11,800
Receivable denominated in 25,000 foreign currency 2 41,000
Total P 81,300
Accounts payable:
Payable denominated in Philippine pesos P 6,850
Payable denominated in 10,000 foreign currency 3 7,600
Payable denominated in 15,000 foreign currency 2 24,450
Total P 38,900
Current exchange rates for foreign currency 1, foreign currency 3, and foreign currency 3 at December 31, 20x6 are P 0.66, P
1.65 and P 0.70, respectively. Determine the net exchange gain or loss that should be reflected in Ilocano’s income statement
for 20x6 from year-end exchange adjustments. ____________________
New plant & equipment of FC 85,000 was acquired in 20x4. Operating expense include FC 50,000 depreciation on plant & equipment,
of which FC 5,000 is related to plant & equipment purchased in 20x4.
For questions 13- 17, assume that the subsidiary’s functional currency is the FC.
For questions 18 – 22, assume that the subsidiary’s functional currency is the Philippine peso