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QUESTION
Marko Company sold spray paint equipment to Spain for 5,000,000 pesetas (P) on October 1, with payment due in six months. The exchange rates were:...
Marko Company sold spray paint equipment to Spain for 5,000,000 pesetas (P) on October 1, with payment due in six months. The exchange rates were:
October 2, 20x6: 1 Peseta = .0068
December 31, 20x6: 1 Peseta = .0078
April 1, 20x7: 1 Peseta = .0076
Answer the following questions. Show all your calculations in a table in the Word document where appropriate. Present all written responses in accord with CSU-Global APA guidelines.
- Did the dollar strengthen or weaken relative to the peseta during the period from October 1 to December 31? Did it strengthen or weaken between January 1 and April 1 of the next year?
- Prepare all required journal entries for Marko as a result of the sale and settlement of the foreign transaction, assuming that its fiscal year ends on December 31. The journal entries should follow appropriate journal entry format, as you studied in your foundational accounting course.
- Did Marko have an overall net gain or net loss from its foreign currency exposure? Please explain how this loss was generated, as well as the implication of this loss on the financial statements.
