On 5 June 2014 Perth Ltd purchased goods on credit from a supplier in UK. The...
On 5 June 2014 Perth Ltd purchased goods on credit from a supplier in UK. The goods are shipped FOB UK on that date. The cost of the goods is UK£250 000. The debt remains unpaid at 30 June 2014, which is also Perth Ltd’s reporting date.
The exchange rates at the relevant dates are:
|
5 June 2014 |
A$1.00 = UK£0.46 |
|
30 June 2014 |
A$1.00 = UK£0.44 |
Required: [use the space provided below]
Provide the required journal entries of Perth Ltd to account for
the above purchase transaction for the
year ended 30 June 2014. Show your calculations/workings.
Homework Answers
| Date | Accounts Titles & Explanation | Debit (A $) | Credit (A $) |
|---|---|---|---|
| 5 June 2014 | Inventory ( £250 000 / £0.46) | 543,478 | |
| Accounts Payable | 543,478 | ||
| (To record purchase of goods on credit ) | |||
| 30 June 2014 |
Unrealized Foreign Exchange Loss [(£250 000 / £0.44) - 543,478 ] |
24,704 | |
| Accounts Payable | 24,704 | ||
| ( To record unrealized loss) |
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