Question

on june 2018, company a sells a mining equipment to a foreign company with the corresponding receivable to be paid on july 1 of the same year.the equipment has a selling price of $150,000 and a cost of $135,000.on june 1,the foreign currency is worth $1.35. company a uses the perpetual inventory system.

Requirement:prepare all necessary journal entries to record the sale and purchase respectively on the book of the both companies under the following assumptions.

A.The transaction is denominated in dollars.

B.The transaction is denominated in foreign currency.

Answer 1

1.)	Seller Books
	Date	Account Titles	Debit $	Credit $
	June.1	Accounts Receivable	150,000
		Sales Revenue		150,000
	June.1	Cost of goods sold	135,000
		Inventory		135,000
	Buyer Books
	Date	Account Titles	Debit $	Credit $
	June.1	Inventory	150,000
		Accounts Payable		150,000
2.)	Seller Books
	Date	Account Titles	Debit $	Credit $
	June.1	Accounts Receivable	202,500
		Sales Revenue		202,500
		(150,000 x 1.35 )
	June.1	Cost of goods sold	135,000
		Inventory		135,000
	Buyer Books
	Date	Account Titles	Debit $	Credit $
	June.1	Inventory	202,500
		Accounts Payable		202,500
		(150,000 x 1.35 )