1. On November 15, 20x4, CC Inc.

a Phil company, ordered merchandise FOB shipping point from a

German company for 200,000 FCUs. The merchandise was shipped and invoice on Dec 10, 20x4. CC
paid the invoice on January 10, 20x5. The spot rates for FCU on the respective dates were:
November 15, 20x4 P.4955
December 10, 20x4 P.4875
December 31, 20x4 P.4675
January 31, 20x5 P.4475
In CC’s December 31, 20x4 income statement, the foreign exchange gain is:

2. On July 1, 20x4, BY Company borrowed 1,680,000 LCU from a foreign lender evidenced by an interest
bearing note due on July 1, 20x5 which is denominated in the currency of the lender. The Phil Peso
equivalent of the note principal was as follows:
Date Amount
7.1.x4 (date borrowed) P210,000
12.31.x4 (BY’s year-end) 240,000
7.1.x5 (date repaid) 280,000
In its income statement for 20x5, what amount should BY include as a foreign exchange gain or los on
the note principal?
3. Greco Inc., a Phil corporation, bought machine parts from Franco Company of Germany on March 1,
20x4 for 70,000 FCU, when the spot rate for FCU was P0.5395. Greco’s year-end was March 31,20x4,
when the spot rate for FCU was P0.5445. Greco bought 70,000 FCUs and paid the invoice on April 20,
20x4, when the spot rate was P0.5495. How much should be shown in Greco’s income statements as
foreign exchange (transaction) gain or loss for the years ended March 31, 20x4 and 20x5?
4. M
5. Kettle Company purchased equipment for 375,000 FCUs (foreign currency units) from a supplier in a
foreign country on July 3, 20x4. Payment in FCU is due on Sept. 3, 20x4. The exchange rates to
purchase one FCU is as follows:

On its August 31, 20x4, income statement, what amount should Kettle report as a foreign exchange
transaction gain:
6. On March 1, 20x4, Wilson Corporation sold goods for a peso equivalent of P31,000 to a foreign
supplier. The transaction is denominated in FC. The payment is received on May 10. The exchange
rates were:
March 1: 1FC = P.31
May 10: 1 FC = P.34
What entry is required to revalue FC payable to peso equivalent value on May 10?
7. On 12/12/x6, a domestic exporter sold inventory to a foreign film for 100,000 FCUs. On that date, the
direct spot rate was P.20. At 12/31/x6, the direct exchange rate was P.24. On 1/22/x7, when the direct
spot rate was P.21, the domestic exporter received full payment of 100,000 FCUs. In the exporter’s
20x6 FSs what should be reported as an FX gain or loss?
8. On 9/30/x6, a domestic exporter acquired inventory from an Italian film for 100,000 FCUs. On that date,
the direct spot rate was P.90. At 12/31/x6, the direct spot rate was P.85. On 1/7/x7, when the direct
exchange rate was P.93, the domestic importer made full payment of 100,000 FCUs. In the exporter’s
20x6 FSs what should be reported as an FX gain or loss?
9. Greco Inc., a Phil corporation, bought machine parts from Franco Company of Germany on March 1,
20x4 for 70,000 FCU, when the spot rate for FCU was P0.5395. Greco’s year-end was March 31,20x4,
 when the spot rate for FCU was P0.5445. Greco bought 70,000 FCUs and paid the invoice on April 20,
20x4, when the spot rate was P0.5495. How much should be shown in Greco’s income statements as
foreign exchange (transaction) gain or loss for the years ended March 31, 20x4 and 20x5?
10. RD Corporation purchases memory on March 15 from a Taiwanese company for 6,500,000 FCUs.
Payment for the inventory occurs on May 15. The exchange rate is 1 FCU = P.029 on March 15 and 1
FCU = P.025 on May 15.
What is the amount recorded on RD’s financial records for the inventory on March 15?
11. What is the amount on Exchange gain or loss recorded on RD’s financial records on May 15?
12. What is the credit to cash when RD pays for the inventory on May 15?
13. Wizard Corporation sells inventory on June 20 to a German company 86,000 FCU. Payment occurs on
August 10. The exchange rate on June 20 is 1 FC = P1.016 and 1 FCU = P1.022 on August 10. What
is the amount recorded on Wizard’s financial records for the sale on June 20?
14. What is the amount on Exchange gain or loss recorded on Wizard’s financial records on August 10?
15. What is the debit to Cash when Wizard collects the Account Receivable on August 10?
16. On January 1, 20x4, HB Inc. issued 10,000,000 FCU of bonds payable. The bonds are due on Dec 31,
20x6. Over the life of the bonds, the exchange rates were as follows: January 1, 20x4 FCU 1 =
P1.40
Dec 31, 20x4 FCU 1 = P1.45
Dec 31, 20x5 FCU 1 = P1.50
Dec 31, 20x6 FCU 1 = P1.48
Assume that exchange gains and losses on long-term monetary are recognized in income immediately.
What is the exchange gain (loss) recognized during 20x6?
17. 20x5?
18. On January 1, 20x3, Original Pilipino Music (OPM), a manufacturer of high-end recording equipment
based on a foreign country, shipped 120,000 FCU worth of inventory to its main foreign distributor, with
full payment of thesegoods to be paid by February 28, 20x3. OPM has a January 31 year-end. A list of
significant dates and exchange rates is shown below.
Transaction date, January 1, 20x3: FCU 1 = P1.1410
Year-end date, January 31, 20x3: FCU 1 = P1.1420
Settlement date, February 28, 20x3: FCU 1 = P1.1450
The invoice price billed by OPM was 120,000 FCUs. At what value did OPM record the initial sale to its
American distributor?
19. What is the amount of cash received by OPM on the settlement date?
20. What is the amount of OPM’s foreign exchange gain or loss on February 28th?
21. What is the TOTAL amount of OPM’s foreign exchange gain or loss on this transaction?