Question: on november 12 higgins inc a us company sold merchandise...

On November 12, Higgins, Inc., a U.S. Company, sold merchandise on credit to Kagome of Japan at a price of 1,640,000 yen. The exchange rate was $.00851 per yen on the date of sale. On December 31, when Higgins prepared its financial statements, the exchange rate was $.00857. Kagome paid in full on January 12, when the exchange rate was $.00875. On December 31, Higgins should prepare the following journal entry:

Multiple Choice

• Debit Sales $98; credit Foreign Exchange Gain $98.

• Debit Foreign Exchange Loss $98; credit Sales $98.

• Debit Accounts Receivable-Kagome $98; credit Foreign Exchange Gain $98.

• Debit Foreign Exchange Loss $98; Accounts Receivable-Kagome $98.

• No journal entry is required until the amount is collected.