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Peerless Corporation (a U.S. company) made a sale to a foreign customer on September 15, for 100,000 crowns. It received payment on October 15. The following exchange rates for 1 crown apply:
September 15 $ 0.60 September 30 0.66 October 15 0.62 Prepare all journal entries for Peerless in connection with this sale, assuming that the company closes its books on September 30 to prepare interim financial statements. (If no entry is required for a transaction/event, select " No journal entry required" in the first account field.)
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Answer :

According to the given information, The Account receivable for Peerless Corporation is $62,000.

JOURNAL ENTRY

Date       Account title and explanation       Debit          Credit

Sep.15       Accounts Receivable (Crown)

                 (100,000 × 0.60)                                       $60,000

                 Sales                                                                                 $60,000

Sep.30      Accounts Receivable (Crown)

                 (100,000 × (0.66 - 0.60)                           $6,000

                 Foreign Exchange gain                                                    $6,000

Oct.15       Foreign Exchange gain/Loss

                 (100,000) × (0.66 - 0.62)                          $4,000

                 Accounts Receivable (Crown)                                        $4,000

Oct.15       Cash (100,000) × (0.62)                            $62,000

                 Accounts Receivable (Crown)

                 (100,000) × (0.62)                                                            $62,000

  • Money owed to a business in the near future is represented by the asset account known as accounts receivable (AR) on the balance sheet.
  • When a business permits a customer to pay on credit for its goods or services, accounts receivable are produced.
  • Accounts payable are similar to accounts receivable, but they represent money that is owed as opposed to money that will be received.
  • The accounts receivable turnover ratio or days sales outstanding can be used to determine the strength of a company's AR.
  • It is possible to conduct a turnover ratio analysis to determine when the AR will actually be received.

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