Page 278 - F1 Integrated Workbook STUDENT 2018

Chapter 16

Solution

On the sale on 1 October 20X1:

Translate the sale at the spot rate prevailing on the transaction date.

Mol 200,000/1.55 = $129,032

$
Dr Receivables 129,032
Cr Sales 129,032

At the reporting date 31 December 20X1:

The receivables balance is a monetary item and so must be retranslated using
the closing rate.

Mol 200,000/1.34 = $149,254

Gain = $149,254 – $129,032 = $20,222

$
Dr Receivables 20,222
Cr P/L (gain) 20,222
At settlement on 4 February 20X2:

The cash received of Mol 200,000 is translated at Mol 200,000/1.41 =
$141,844.

Mol 200,000/1.34 = $149,254

Loss = $149,254 – $141,844 = $7,410
$
Dr Bank 141,844
Cr Receivables 149,254
Dr P/L (loss) 7,410

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