Lincoln Corporation,a U Required:
Determine the Amount at Which Receivables and Payables Should

question 6

Essay

Lincoln Corporation,a U.S.manufacturer,both imports needed materials and exports finished products.Their receivables and payables are listed below,prior to year-end adjustments or preparation of the closing entries.
$$\begin{array} { | l | r | r | r | r | } \hline & \begin{array} { c } \text { Foreign } \\\text { Currency } \\\text { Units }\end{array} & \begin{array} { c } \text { Rate at } \\\text { Date of } \\\text { Transaction }\end{array} & \begin{array} { c } \text { Per Books } \\\text { in U.S. } \\\text { Dollars }\end{array} & { \begin{array} { c } \text { Current } \\\text { Rate at } \\12 / 31 / 14\end{array} } \\\hline \text { ACCOUNTS RECEIVABLE } & & & & \\\hline \text { Japanese yen } & 14,678,000 & \$ 0.0109007 & 160,000 & \$ 0.0120 \\\hline \text { Euros } & 50,000 & 1.2372 & 61,860 & 1.4235 \\\hline \text { Hungarian forint } & 50,000,000 & 0.0044 & \underline { 220,000 } & 0.0053 \\\hline \text { TOTAL } & & & 441,860 & \\\hline & & & & \\\hline \text { ACCOUNTS PAYABLE } & & & & \\\hline \text { Euros } & 50,000 & 1.2378 & 61,890 & \$ 1.4235 \\\hline \text { Mexican pesos } & 1,250,000 & 0.0790 & 99,875 & 0.0845 \\\hline \text { Indian rupee } & 4,000,000 & 0.0216 & \underline { 86,400 } & 0.0223 \\\hline \text { TOTAL } & & & 248,165 & \\\hline\end{array}$$ Required:
Determine the amount at which receivables and payables should be reported on December 31,2014,and the net exchange gain or loss that would be reported as a result of year-end adjustments.

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Definitions:

Units Sold

The quantity of product sold in a specific period, often used as a measure of business performance.

Units of Production Depreciation

A method of depreciation where the useful life of an asset is based on the number of units it produces.

Fixed Product Cost

Costs associated with production that do not change with the level of output, such as salaries of permanent staff and depreciation of machinery.

Straight Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.