Foreign Currency Transaction
Response to the following problem:
Apple Core, a U.S. company, sold 125,000 cases of tropical fruit to Minh Market, a Vietnamese firm, for 3.2 billion Vietnamese dong. The sale was made on November 17, 2009, when one U.S. dollar equaled 16,000 dong. Payment of 3.2 billion Vietnamese dong was due to Apple Core on January 16, 2010. At December 31, 2009, one U.S. dollar equaled 18,000 dong, and on January 16, 2010, one U.S. dollar equaled 18,400 dong
1. What will be the value of the accounts receivable on December 31, 2009, in Vietnamese dong?
2. What will be the value of the accounts receivable on December 31, 2009, in U.S. dollars?
3. Will Apple Core recognize an exchange gain or loss at December 31, 2009? Explain.
4. Will Apple Core recognize an exchange gain or loss on January 16, 2010? Explain.
5. In connection with this sale, what amount will Apple Core report as Sales Revenue in its income statement for 2009?
6. In connection with this sale, what amount will Apple Core report as Cash Collected from Customers in its statement of cash flows for 2010?