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Dolly, Tutor
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Marvin Companys receivable from a foreign customer is

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A. Marvin Company's receivable from a foreign customer is denominated in the customer's local currency.
This receivable of 900,000 local currency units (LCU) has been translated into $315,000 on
Marvin's December 31, 20X5, balance sheet. On January 15, 20X6, the receivable was collected in
full when the exchange rate was 3 LCU to $1. The journal entry Marvin should make to record the
collection of this receivable is?

B.On July 1, 20X1, Black Company lent $120,000 to a foreign supplier, evidenced by an interestbearing
note due on July 1, 20X2. The note is denominated in the borrower’s currency and was equivalent
to 840,000 local currency units (LCU) on the loan date. The note principal was appropriately
included at $140,000 in the receivables section of Black’s December 31, 20X1, balance sheet. The
note principal was repaid to Black on the July 1, 20X2, due date when the exchange rate was 8 LCU
to $1. In its income statement for the year ended December 31, 20X2, what amount should Black
include as a foreign currency transaction gain or loss on the note principal?
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