Year end is December 31, 2017

Opening balance sheet is $500 cash and $500 share capital.  No prior year.

ADJ 1 Record deposit to USD broker account: January 1, 2017 open USD broker account with $125 CDN.  The rate is 1.25 which gives them $100 USD in the account.

ADJ 2 Record purchase of Company A shares: February 1, 2017 purchase 100 shares of Company A for $1 USD per share.  The exchange rate on that date is 1.10. This gives rise to a loss on forex of $100USD x (1.25 – 1.10) = $15 CAD

ADJ 3 Record sale of Company A shares: March 1, 2017 sale of 60 shares of Company A for $2 USD per share.  The exchange rate on that date is 1.00.  This give rise to a gain on sale of marketable securities of $120CDN - $66CDN = $54CDN.

 

Adjusting Entry

 

Entry in the Working paper

 

ADJ 4 Record YE value of USD in broker account: December 31, 2017 exchange rate is 1.25.  Adjust the US$ broker account (cash balance) from $120 USD to $150 CAD$ ($120 x 1.25) = Unrealized gain on forex of $30.

ADJ 5 Record YE value of Company A shares remaining on hand: December 31, 2017 ending balance of Company A is 40 shares @ $2USD Market value per share = $80 USD.  Exchange to CAD$ FMV = $80USD x 1.25 y/e forex rate = $100 CAD. Unrealized gain on marketable securities = $100CAD - $44 CAD (40 shares x $1 per share x 1.10 forex rate at time of purchase) = $56 CAD.