Question

Chapter 12 and 13 Assignment Nam Question A company purchased inventory from Europe valued at $100.000 euros. The spot rate at the transaction date was C$1.00 -0.85 Euro. The spot rate on year-end date was $1.00 -0.80 Euro. When the company paid the supplier 3 months after year-end the spot rate was $1.00 -0.90 Euro. Provide all necessary journal entries. Round all amounts to nearest dollar, Date Explanation/Account Debit Credit
provide all necessary journal entries

Answer 1

1. Journal Entry XXX Inc. Books of accounts for the year ending xxx 31, 20xx Date XX 1$ = 0.85 Euros 100,000 $ = 85000 Euros 100,000 $ restated to 1$ = 0.80 Euros Currency: $ Debit Credit Purchases Alc 85,000 Accounts Payable Alc 85,000 (Narrative: Purchases recorded in functional currency i.e. Euro) Accounts Payable Alc 5,000 Foreign exchange gain / loss A/C 5,000 (Narrative : Being foreign exchange fluctuation recorded at year end) Accounts Payable Alc 5,000 Foreign exchange gain / loss A/C 5,000 (Narrative : Being foreign exchange fluctuation recorded at year end) Accounts Payable Alc 80,000 Foreign exchange gain / loss Alc 10,000 Cash 90,000 (Narrative : Being payment made) XX