SEU-ACCT302-Quiz-Ch08

1. On September 3, 20X8, Jackson Corporation purchases goods for a U.S. dollar equivalent of $17,000 from a Swiss company. The transaction is denominated in Swiss francs (SFr). The payment is made on October 10. The exchange rates were:

September 3: 1 Swiss France = $0.85

October 10   : 1 Swiss France = $0.90

What entry is required to revalue foreign currency payable to U.S. dollar equivalent value on October 10?

2. If 1 British pound can be exchanged for 180 cents of U.S. currency, what fraction should be used to compute the indirect quotation of the exchange rate expressed in British pounds?

3. Suppose the direct foreign exchange rates in U.S. dollars are:

1 Singapore dollar = $.7025
1 Cyprus pound = $2.5132

Based on the information given above, the indirect exchange rates for the Singapore dollar and the Cyprus Pound are:

4. Mint Corporation has several transactions with foreign entities. Each transaction is denominated in the local currency unit of the country in which the foreign entity is located. On November 2, 20X8, Mint sold confectionary items to a foreign company at a price of LCU 23,000 when the direct exchange rate was 1 LCU = $1.08. The account has not been settled as of December 31, 20X8, when the exchange rate has increased to 1 LCU = $1.10. The foreign exchange gain or loss on Mint’s records at year-end for this transaction will be:

5. Suppose the direct foreign exchange rates in U.S. dollars are:

1 Singapore dollar = $.7025
1 Cyprus pound = $2.5132

Based on the information given above, how many Singapore dollars are required to purchase goods costing 10,000 U.S. dollars?

6. Suppose the direct foreign exchange rates in U.S. dollars are:

1 Singapore dollar = $.7025
1 Cyprus pound = $2.5132

Based on the information given above, how many U.S. dollars must be paid for a purchase of citrus fruits costing 10,000 Cyprus pounds?

7. Upon arrival in Chile, Karen exchanged $1,000 of U.S. currency into 480,000 Chilean Pesos. While returning after her two month visit, she exchanged her remaining 50,000 Pesos into $100 of U.S. currency. What amount of gain or a loss did Karen experience on the 50,000 pesos she held during her visit and converted to U.S. dollars at the departure date?

8. Mint Corporation has several transactions with foreign entities. Each transaction is denominated in the local currency unit of the country in which the foreign entity is located. On October 1, 20X8, Mint purchased confectionary items from a foreign company at a price of LCU 5,000 when the direct exchange rate was 1 LCU = $1.20. The account has not been settled as of December 31, 20X8, when the exchange rate has decreased to 1 LCU = $1.10. The foreign exchange gain or loss on Mint’s records at year-end for this transaction will be:

9. Chicago based Corporation X has a number of importing transactions with companies based in UK. Importing activities result in payables. If the settlement currency is the British Pound, which of the following will happen by changes in the direct or indirect exchange rates?

10. Corporation X has a number of exporting transactions with companies based in Vietnam. Exporting activities result in receivables. If the settlement currency is the US dollar, which of the following will happen by changes in the direct or indirect exchange rates?

11. Chicago based Corporation X has a number of importing transactions with companies based in UK. Importing activities result in payables. If the settlement currency is the British Pound, which of the following will happen by changes in the direct or indirect exchange rates?