On March 1, 20X8, Wilson Corporation sold goods for a U.S. dollar equivalent of $31,000 to a Thai company. The transaction is denominated in Thai bahts. The payment is received on May 10. The exchange rates were: What entry is required to revalue foreign currency payable to U.S. dollar equivalent value on May 10?

Question

On March 1, 20X8, Wilson Corporation sold goods for a U.S. dollar equivalent of $31,000 to a Thai company. The transaction is denominated in Thai bahts. The payment is received on May 10. The exchange rates were:  What entry is required to revalue foreign currency payable to U.S. dollar equivalent value on May 10?

Quizplus · Accepted Answer

On May 10, the payable needs to be revalued at the current exchange rate of 1 USD equivalent to 31.20 Thai bahts (derived from the given exchange rate of 0.032 USD to 1 Thai baht). Therefore, the foreign currency payable needs to be adjusted to reflect the updated exchange rate. The entry to be recorded is as follows:
Accounts Payable (Thai bahts) - 968,750
Foreign Currency Exchange Gain - 11,250
To adjust foreign currency payable to current exchange rate - 980,000 (31,000 x 31.20)

On March 1, 20X8, Wilson Corporation Sold Goods for a U.S