Assignment 8 (Chapter 10)

Question 1

Chicken Flick is a Canadian restaurant that is owned by two exceptional chefs, Usain King and Florence Joyner. The restaurant is known for its delicious chicken recipes based on their Jamaican heritage. The restaurant has recently expanded into three different countries, the United States of America (USA), the United Kingdom (UK), and Switzerland. As the restaurant is a relatively small brand, the majority of the business decisions are made in Canada. Likewise, the majority of the locations’ expenses are paid from the Head Office in Toronto.

Daily sales in the local currency as well as the daily exchange rates for each of the three countries for the year 2020 have been provided in an Excel file labelled “Ch10_ForeignSalesData”.

Download the Excel File Here

Using the data provided in the Excel file, prepare a conversion of sales from the foreign currencies to the functional currency. To perform this task, you will have to combine the three sheets into one. Using this data, answer the included questions.

For this question you will use PowerBI—instructions on how to complete the task are included below.

Instructions:

Ensure you have downloaded the Excel file provided onto your computer. This will be your starting point.
Open PowerBI and click “Get data”, select Excel Workbook and click Connect. You will be asked for the filename you want to connect to. Navigate to where you saved the file and select the name of the file that you downloaded earlier. As the file contains multiple sheets, select the three sheets that you will require for the analysis and click “Load.” Once this is correctly done, you will see the worksheets for the three countries under the Fields Tab on the right.
Your first task will be to combine all the sheets into one file.
To do this, click on the “Transform data” icon under the Home menu. In the “Home menu of the Power Query Editor, click on the “Append Queries” icon. Select Three or more tables and append the remaining two to the Switzerland table. You should first visually inspect your worksheets to ensure that the headings are similar or else the Tables will not append properly.
Now if you inspect the data in the Switzerland worksheet, you will notice that the contents of all three sheets are stacked one on top of the other.
This is your opening worksheet for the tasks you will be required to perform.
Next you will convert the foreign currency transactions to Canadian dollars. To do this, you will click on the Add Column menu and select the “Custom Column”. In the dialog box, you will name the column “Canadiansales” and in the expression box build the expression using the Available columns as follows: [Sales]*[Exchange rate] and click OK. Ensure that the created variable is a numerical one. If you do not see 1.2 before the variable name, then change it to numerical by clicking on the type (whatever character is to the left of the “Canadiansales” variable and changing it to 1.2 (numerical).
Go back to the Home Tab in the Power Query editor and click “Close & Apply.” You are now ready to build your visualization.
Select your visualization and using the Switzerland worksheet, drag the “Country” field into the Axis, the “Country” into the Legend and “Canadiansales” into Values.
You can also filter by Date by adding the Date into the Filter. In your visualization, select Month as your Axis.

Part 1: What is the total amount of sales in Canadian dollars from the United States?

Multiple Choice

$1,236,607
$1,555,353
$1,205,882Correct
$1,351,228

Part 2: What is the total amount of sales in Canadian dollars from the United Kingdom?

Multiple Choice

$1,236,607
$1,555,353
$1,205,882
$1,351,228

Part 3: What is the total amount of sales in Canadian dollars from Switzerland?

Multiple Choice

$1,236,607
$1,555,353
$1,205,882
$1,351,228

Part 4: Which country was responsible for the most foreign sales in the year 2020?

Multiple Choice

Brazil
Australia
United Kingdom
Switzerland and USA

Part 5: In which month were the most sales recorded in the United Kingdom?

Multiple Choice

July
August
October
December

Part 6: Considering all three countries, what was the largest monthly sale in Canadian dollars recorded by any country?

Multiple Choice

$153,606
$140,546
$158.591
$149,473

Part 7: Considering all three countries, what was the least monthly sale in Canadian dollars recorded by any country?

Multiple Choice

$84,680
$83,862
$92,711
$85,329

Question 8

Equitable Diversity International Inc. (EDI) buys and sells artwork from all over the world. On September 1, Year 5, EDI agreed to purchase some paintings from a seller in Mexico at a price of 500,000 Mexican pesos (MXN) when the spot rate was MXN1 = $0.064. EDI took delivery of the paintings on December 1, Year 5 when the spot rate was MXN1 = $0.077. The invoice required EDI to make payment by April 1, Year 6.

The fiscal year-end of EDI is December 31, and on this date the spot rate was MXN1 = $0.075. EDI made payment on April 1, Year 6, when the spot rate was MXN 1 = $0.060.

Required:

(a) Prepare the journal entries to record (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

(i) the purchase of the carvings in Year 5

(ii) any adjustments required on December 31, Year 5

(b) Prepare a balance sheet extract at December 31, Year 5 to show the accounting for the transactions. (Omit $ sign in your response.)

(c) Worried that the Canadian dollar may depreciate relative to the MXN, on December 3, Year 5, EDI decided to buy a forward contract from the Royal Bank at the 120-day forward rate of MXN1 = $0.079 when the spot rate was still MXN1 = $0.077. On December 31, Year 5, the forward rate with maturity on April 1, Year 6 was MXN1=$0.078. No hedge accounting is applied.

(i) Show all the journal entries to record both the purchase and the forward contracts for both Year 5 and Year 6. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)

(ii) Show the balance sheet and income statement extracts for both the purchase and the forward contract for Year 5. (Omit $ sign in your response.)

Related Assignment Solution: (Solution) MOS4465 Assignment 9 (Chapter 11)