Global Motors is a U.S. corporation that purchases automobiles from European manufacturers for distribution in the United States. A recent purchase involved the following events: Nov. 12 Purchased automobiles from Stockholm Motors in Swedish kronor for Sk20,000,000, payable in 60 days. Current exchange rate, $0.1286 per krona. (Global uses the perpetual inventory system.) Dec. 31 Made year-end adjusting entry relating to the Sk20,000,000 account payable to Stockholm Motors. Current exchange rate, $0.1288 per krona. Jan. 11 Issued a check to World Bank for $2,566,800 in full payment of the account payable to Stockholm Motors. Required: a. Prepare in general journal form the entries necessary to record the preceding events. b. Compute the exchange rate (price) of the krona in U.S. dollars on January 11.
Global Motors is a U.S. corporation that purchases automobiles from European manufacturers for distribution in the United States. A recent purchase involved the following events: Nov. 12 Purchased automobiles from Stockholm Motors in Swedish kronor for Sk20,000,000, payable in 60 days. Current exchange rate, $0.1286 per krona. (Global uses the perpetual inventory system.) Dec. 31 Made year-end adjusting entry relating to the Sk20,000,000 account payable to Stockholm Motors. Current exchange rate, $0.1288 per krona. Jan. 11 Issued a check to World Bank for $2,566,800 in full payment of the account payable to Stockholm Motors. Required: a. Prepare in general journal form the entries necessary to record the preceding events. b. Compute the exchange rate (price) of the krona in U.S. dollars on January 11.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Global Motors is a U.S. corporation that purchases automobiles from European manufacturers for distribution in the United States. A recent purchase involved the following events:
| Nov. | 12 | Purchased automobiles from Stockholm Motors in Swedish kronor for Sk20,000,000, payable in 60 days. Current exchange rate, $0.1286 per krona. (Global uses the perpetual inventory system.) | |
| Dec. | 31 | Made year-end |
|
| Jan. | 11 | Issued a check to World Bank for $2,566,800 in full payment of the account payable to Stockholm Motors. |
Required:
a. Prepare in general journal form the entries necessary to record the preceding events.
b. Compute the exchange rate (price) of the krona in U.S. dollars on January 11.
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