Exercise – Session 11

Question 1

Highland Company sold goods to an Egyptian company for 100,000 Egyptian pounds on December 6,
20X3, with payment due on January 15, 20X4. The transaction is denominated in Egyptian pounds.
The reporting currency of Highland is USD ($). The exchange rates were as follows:
 
December 6, 20X3 1 Egyptian pound = $ 0.1593  
December 31, 20X3 1 Egyptian pound =  $ 0.1612  
January 15, 20X4 1 Egyptian pound =  $ 0.1604  

Required
1. Prepare journal entries on Highland’s book from December 6, 20X3 until January 15, 20X4.
2. What is Highland's overall net gain or net loss from its foreign currency exposure related to
this transaction?

Question 2

Highland Company purchased goods from an Egyptian company for 100,000 Egyptian pounds on
December 6, 20X3, with payment due on January 15, 20X4. The transaction is denominated in
Egyptian pounds. The reporting currency of Highland is USD ($). The exchange rates were as follows:
 
December 6, 20X3 1 Egyptian pound = $ 0.1593  
December 31, 20X3 1 Egyptian pound =  $ 0.1612  
January 15, 20X4 1 Egyptian pound =  $ 0.1604  

Required
1. Prepare journal entries on Highland’s book from December 6, 20X3 until January 15, 20X4.
2. What is Highland's overall net gain or net loss from its foreign currency exposure related to
this transaction?

Question 3

PT Nusantara sold goods to an American company for 100,000 US Dollar on December 10, 20X3,
with payment due on January 20, 20X4. The transaction is denominated in US Dollar. The reporting
currency of PT Nusantara is Rupiah (Rp). The exchange rates were as follows:
 
December 10, 20X3 1 US Dollar = Rp 13.000  
December 31, 20X3 1 US Dollar = Rp 12.900  
January 20, 20X4 1 US Dollar = Rp 13.100  
Required
1. Prepare journal entries on Nusantara’s book from December 10, 20X3 until January 20,
20X4.
2. What is Nusantara 's overall net gain or net loss from its foreign currency exposure related
to this transaction?

Question 4

PT Nusantara purchased goods from an American company for 100,000 US Dollar on December 10,
20X3, with payment due on January 20, 20X4. The transaction is denominated in US Dollar. The
reporting currency of PT Nusantara is Rupiah (Rp). The exchange rates were as follows:
 
December 10, 20X3 1 US Dollar = Rp 13.000  
December 31, 20X3 1 US Dollar = Rp 12.900  
January 20, 20X4 1 US Dollar = Rp 13.100  

Required
1. Prepare journal entries on Nusantara’s book from December 10, 20X3 until January 20,
20X4.
2. What is Nusantara 's overall net gain or net loss from its foreign currency exposure related
to this transaction?