Question

Record a journal entry for each of the following transactions:

1. A U.S.-based MNC invests $800 million in a factory located in South Africa and finances the project by issuing bonds in Germany.
2. A Mexican company sells $5 million worth of goods to an Arizona company and deposits the check in a bank in Scottsdale.
3. The Bank of Denmark purchases 1.3 billion dollars in the foreign exchange market to hold down the value of the krone and uses these dollars to buy U.S. Treasury bonds.
4. A U.S.-based MNC pays $9 million in dividends to foreign residents. Those residents decide to hold the dividends in bank deposits in New York.
5. A U.S. car manufacturer exports $110 million of cars to the Philippines and receives payment in the form of a check drawn on a U.S. bank.

Answer 1

Journal Entries:

Date a) Accounts Titles and Explanations Investments in Southe Africa Debit (S) Credit (S) 800 millions Cash To record S800 million amount invested in South Africa) Bank 800 millions 5 million Credit Sales (To record the sale of goods and Investments in Money Market Securities 5 million s check in bank 1.3 bilion Cash To record the puchase of U.S teasury bonds Dividends Payable 1.3 bilion 9 million Cash (To record payment of dividends by cash Bank 9 million 110 million Credit Sales o record the credit sale of cars and receives payment in check 110 million