American TV Corporation had two foreign currency transactions during December 2011, as follows:
December 12 | Purchased electronic parts on account from Toko Company of Japan at an invoice price of 50,000,000 yen when the spot rate for yen was $0.00750. Payment is due on January 11, 2012. |
December 15 | Sold television sets on account to British Products Ltd. for 40,000 pounds when the spot rate for British pounds was $1.65. The invoice is denominated in pounds and is due on January 14, 2012. |
REQUIRED
1. Prepare journal entries to record the foregoing transactions. Ignore Cost of Goods Sold.
2. Prepare journal entries to adjust the accounts of American TV Corporation at December 31, 2011, if the current exchange rates are $0.00760 and $1.60 for Japanese yen and British pounds, respectively.
3. Prepare journal entries to record payments to Toko Company on January 11, 2012, when the spot rate for Japanese yen is $0.00765, and to record receipt from British Products Ltd. on January 14, 2012, when the spot rate for British pounds is $1.63.
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