What is the journal entry at the date of cash receipt on 1 August 2023?

Question

Susie · Answer

The amount of exchange gain is the difference between the amount paid and the amount received. Hence, the gain on exchange is A$0.10. In the question given, the terms "receipt," "cash," and "entry" are associated with the accounting journal entry to be made on 1 August 2023 at the time of cash receipt.        In the accounting journal entry, the following accounts are affected:              Cash Account              Exchange Gain/Loss Account              The journal entry at the date of cash receipt on 1 August 2023 is shown as follows:              Cash Account Debit A$1.00              Exchange Gain/Loss Account Credit A$0.10 [Gain on exchange rate]        Exchange gain/loss account is used to record exchange gains or losses. A gain on exchange rate arises when the value of the foreign currency increases relative to the local currency. In this case, the Australian Dollar value increases relative to the US Dollar; thus, a gain on exchange rate is recorded.

The Accounting Journal Entry on 1 August 2023

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