Quantum Company Imports Goods from Different Countries

question 38

Essay

Quantum Company imports goods from different countries.Some transactions are denominated in U.S.dollars and others in foreign currencies.A summary of accounts receivable and accounts payable on December 31,20X8,before adjustments for the effects of changes in exchange rates during 20X8,follows:
The spot rates on December 31,208,were:

The average exchange rates during the collection and payment period in 20X9 are:

Required:
1.Prepare the adjusting entries on December 31,20X8.
2.Record the collection of the accounts receivable and the payment of the accounts payable in 20X9.
3.What was the foreign currency gain or loss on the accounts receivable transaction denominated in SFr for the year ended December 31,20X8? For the year ended December 31,20X9? Overall for this transaction?
4.What was the foreign currency gain or loss on the accounts receivable transaction denominated in ¥? For the year ended December 31,20X8? For the year ended December 31,20X9? Overall for this transaction?

Problem 71 (continued):

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Definitions:

Availability Heuristic

A cognitive bias that causes people to overestimate the probability of events associated with memorable or vivid examples.

Satisficing

A decision-making strategy that entails selecting the first option that meets a minimum set of criteria, rather than optimizing.

Heuristic

Cognitive shortcuts or rules of thumb that simplify decision making, often at the expense of accuracy or completeness.

Mechanical Procedure

A process or operation that is carried out with machinery or equipment rather than by hand or through human effort.