The Kruk Company regularly sells merchandise to German customers. On December 1, 2018, Kruk sold merchandise to a German customer at a price of three million Euros; the customer is required to pay for the goods on February 1, 2019. The spot rate was $0.875 per euro on December 1, 2018, it was $0.8875 per euro on December 31, 2018, and it was $0.865 per euro on February 1, 2019. Required:Prepare the journal entries that might be necessary on December 1, 2018, December 31, 2018, and on February 1, 2019.
What will be an ideal response?
| December 1, 2018 | ||||||
| Accounts receivable (euros) | 2,625,000 | |||||
| Sales | 2,625,000 |
| December 31, 2018 | ||||||
| Accounts receivable (euros) | 37,500* | |||||
| Foreign currency transaction gain | 37,500 |
| February 1, 2019 | ||||||
| Cash | 2,595,000 | |||||
| Foreign currency transaction loss | 67,500* | |||||
| Accounts receivable (euros) | 2,662,500 |
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