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Foreign Currency Trial Balance Analysis

The document outlines the trial balance adjustments for accounts receivable and payable involving foreign currencies (FC1 and FC2) as of December 31, 20x4. It provides calculations for indirect and direct exchange rates, detailing the balances for dollars and foreign currency receivables and payables. Key figures include adjusted balances for accounts receivable and payable, with specific exchange rates used for conversions.

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11 views2 pages

Foreign Currency Trial Balance Analysis

The document outlines the trial balance adjustments for accounts receivable and payable involving foreign currencies (FC1 and FC2) as of December 31, 20x4. It provides calculations for indirect and direct exchange rates, detailing the balances for dollars and foreign currency receivables and payables. Key figures include adjusted balances for accounts receivable and payable, with specific exchange rates used for conversions.

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nct dream full album
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Problem 7-5

TRIAL BALANCE
Unadjusted Adjusted
Accounts Receivable (Denominated in FC1) P42,000 P 41,700
Dollars Receivable from exchange Broker 40,600 ?
Foreign currency Receivable From Exchange Broker 82,000 81,000
Accounts Payable (denominated in FC2) 80,000 ?
Dollars Payable to exchange Broker ? ?
Foreign currency payable to exchange broker 40,600 ?
FC1 Rate= 1FC1=0.57
FC2 Rate= 1FC2=P0.2020

1) Indirect Exchange Rates For FC1


Dec 1, 20x4: 70,000FC1/P42,000= 1.6667 or P1=1.667 FC1
Dec 31. 20x4: 70,000FC1/P41,700= 1.6786 or P1=1.679 FC1

2) Balance of Foreign currency Payable to exchange brokers in adjusted trial balance


70,000 FC1*P.57=P39,900

3) Direct Exchange Rate on Dec 1, 20x4


P40,600/70,000 FC1= 0.58 or 1 FC1=P0.58

4) Dollars receivable form exchange Broker in the adjusted Trial balance.


Entry Used to record Forward Contract(sell) on December 1, 20x4
Peso Receivable from Broker 40,600
FC Payable to broker 40,600

P40,600 is the amount of Receivable from the exchange Broker in the adjusted trial balance of
dec 31 20x4, this balance account does not change because it is denominated in Philippine Peso.

5) Indirect Exchange rate for FC2


Dec 1, 20x4: 400,000FC1/P80,000=5 or P1=5 FC2
Dec 31, 20x4: 400,000FC1/P80,800*=4.95 or P1=4.95 FC2
*400,000FC2(P.2020) =P80,800
6) Account Dollars Payable to Exchange Brokers in both the unadjusted and adjusted Trial balance

Entry Used to record Forward Contract (Buy) on Oct 2 20x4

FC Receivable from Broker 82,000


Peso Payable to Broker 82,000

The peso Payable to Exchange brokers in both adjusted and unadjusted is P82,000. The account
peso payable to the broker is denominated in pesos and does not change because of the
exchange rate changes.

7) Direct Exchange rate on Oct 2 20x4


P82,000/400,000FC2=0.205 or 1FC2=P0.205

8) Accounts Payable Balance on December 31, 20x4


400,000FC2*P0.2020 spot rate= P80,800

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