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

Question details

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.

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