Merchant Company had the following foreign currency transactions: On November 1, 20X6, Merchant sold goods to a company located
in Munich, Germany. The receivable was to be settled in European euros on February 1, 20X7, with the receipt of €190,000 by Merchant Company. On November 1, 20X6, Merchant purchased machine parts from a company located in Berlin, Germany. Merchant is to pay €95,000 on February 1, 20X7. The direct exchange rates are as follows: November 1, 20X6 €1 = $ 0.60 December 31, 20X6 €1 = $ 0.62 February 1, 20X7 €1 = $ 0.58 Required: Record the T-accounts for the following transactions (Record the transactions in the given order.) The November 1, 20X6, export transaction (sale). The November 1, 20X6, import transaction (purchase). The December 31, 20X6, year-end adjustment required of the foreign currency–denominated receivable of €190,000. The December 31, 20X6, year-end adjustment required of the foreign currency–denominated payable of €95,000. The February 1, 20X7, adjusting entry to determine the U.S. dollar–equivalent value of the foreign currency receivable on that date. The February 1, 20X7, adjusting entry to determine the U.S. dollar–equivalent value of the foreign currency payable on that date. The February 1, 20X7, settlement of the foreign currency receivable. The February 1, 20X7, settlement of the foreign currency payable.
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