Name: JOJIE A.

DADOR Course & Year: BSBA 3rd year

Subject: BA Core 6 – International Business and Trade

Assessment for Global Financial Management

1. On September 1, 2011, Wheels Inc., a calendar year corporation, purchased car tires from a factory
in Hongkong for 200,000 Hongkong dollars. The amount is payable in 5months. Wheels Inc. prepares
quarterly statement of comprehensive income. The exchange rate for the Hongkong dollar has
varied as follows:

September 1, 2011 1hkg$ = P 5.61

September 30, 2011 1hkg$ = P 5.59
December 31, 2011 1hkg$ = P 5.62
January 30, 2012 1hkg$ = P 5.65

Questions: Convert to Philippine Peso

1) How much the reportable purchases in 2011

Ans: 200,000 Hkg$ x P 5.62 = P 1,124,000.00

2) How much is the acceptance payable on the date of the transaction?

Ans: 200,000 Hkg$ x P 5.61 = P1,122,000.00

3) How much the reportable foreign exchange loss on September 30, 2011 and
December 31, 2011 and on January 30, 2012?
Ans: ForEx gain on Sept. 30, 2011
200,000 Hkg$ x (P5.61 - P5.59) = P 4,000.00
ForEx loss on Dec. 31, 2011:
200,000 Hkg$ x (P 5.62 – P 5.59) = P 6,000.00
ForEx loss on Jan. 30, 2012:
200,000 Hkg$ x (P 5.65 – P 5.62) = P 6,000.00

4) How much is the new acceptance payable on September 30, 2011, December
31, 2011 and on settlement date January 30, 2012?
Name: JOJIE A. DADOR Course & Year: BSBA 3rd year
Subject: BA Core 6 – International Business and Trade

Ans: If Wheels, Inc wish to pay the materials in installment in equal amount for
five months, amount to be paid every month is 40,000 Hkg$ (200,000 Hkg$ ÷ 5
Months)

September 30, 2011:

40,0000 Hkg$ x P5.59 = P223,600.00
December 31, 2011:
40,000 Hkg$ x P5.62 = P224,800.00
January 30, 2012:
40,000 Hkg$ x P 5.65 = P 226,000.00

However, if Wheels, Inc. wish to pay the materials in full amount any time of the day within
five months, the new acceptable payables are the ff:

September 30, 2011:

200,000 Hkg$ x P 5.59 = P 1,118,000.00

December 31, 2011:

200,000 Hkg$ x P 5.65 = P 1,124,000.00

January 30, 2012:

200,000 Hkg$ x P 5.65 = P 1,130,000.00

2. On September 9, 2008 Selma Inc. accepted a non-cancellable merchandise sales order from
Japanese firm. The contract price was 100,000 yens. The merchandise was delivered on December
14, 2008. The invoice was dated December 11, 2008. The shipping date(FOB shipping point). Full
payment was received on January 22, 2009. The spot direct exchange rates for the Japanese yens on
the respective dates are as follows:

September 9, 2008 P 0.75

December 11, 2008 P 0.78
December 14, 2008 P 0.77
December 31, 2008 P 0.73
January 22, 2009 P 0.79

Question: Convert to Philippine Peso

Name: JOJIE A. DADOR Course & Year: BSBA 3rd year
Subject: BA Core 6 – International Business and Trade

1. What is the reportable sales amount in 2008 income statement?

Ans: ¥100,000 x P 0.78 = P 78,000.00
Exchange rate used was P 0.78 because that was the exchange rate when the invoice was
made which is on December 11, 2018.

2. What is the reportable foreign exchange gain or loss amount in the 2008 income
statement?
Ans: ¥100,000 x (P 0.78 – 0.73) = P 5,000.00 loss
Exchange rate when the Sales was recorded less the closing rate/exchange rate when the
income Statement was dated.

3. What is the reportable value of accounts receivable from the customer at December 31,
2008 and on date of settlement January 22, 2009?
Ans: Accounts Receivable on December 31, 2008:
¥100,000 x P 0.73 = P 73,000.00
Accounts Receivable on January 22, 2009:
¥100,000 x P 0.79 = P 79,000.00

4. What is the reportable foreign exchange gain or loss amount on January 22, 2009
settlement date?
Ans: ¥100,000 x (P 0.79 – 0.73) = P 6,000.00 gain
Exchange rate when the payment was received less Year-End Exchange rate/income
Statement was dated.