Problem: U.S. Company has the following receivables and payables denominated in foreign currencies, prior to closing on December 31.
|
Item
|
Current $ balance
|
Foreign currency balance
|
December 31 spot rate
|
|
1. Receivable
|
$125,840
|
100,000 Euros
|
$1.25
|
|
2. Receivable
|
372,500
|
500,000 Singapore dollars
|
0.75
|
|
3. Payable
|
1,378,000
|
1,000,000 pounds sterling
|
1.38
|
|
4. Payable
|
68,000
|
500,000 Hong Kong dollars
|
0.13
|
Required: Prepare the adjusting entry the U.S. company makes at December 31 to update its receivables and payables. Show all calculations.
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