Journal entries for an account payable denominated in Mexican Pesos ($US weakens and strengthens) Assume that your company purchases inventories from a Mexican supplier on December 15. The invoice specifies that payment is to be made on March 15 in Mexican Pesos (Peso) in the amount of 350 Pesos. Your company operates on a calendar year basis. Assume the following exchange rates: December 15 $0.046:1 Peso December 31 $0.053:1 Peso March 15 $0.050:1 Peso Prepare the journal entries to record the purchase (assume perpetual inventory accounting), the required adjusting entry at December 31, and the payment on March 15. Date General Journal Description Debit Credit Dec 15 Inventory Accounts payable Dec 31 Foreign currency transaction loss Accounts payable Mar 15 Accounts payable 16,100 = = 0✓ 16,100 く 2,450 0✓ 2,450 ✓ 28,000 x Foreign currency transaction gain く 0✓ 10,500 x Cash 0✓ 17,500 ✓

Journal entries for an account payable denominated in Mexican Pesos ($US weakens and strengthens) Assume that your company purchases inventories from a Mexican supplier on December 15. The invoice specifies that payment is to be made on March 15 in Mexican Pesos (Peso) in the amount of 350 Pesos. Your company operates on a calendar year basis. Assume the following exchange rates: December 15 $0.046:1 Peso December 31 $0.053:1 Peso March 15 $0.050:1 Peso Prepare the journal entries to record the purchase (assume perpetual inventory accounting), the required adjusting entry at December 31, and the payment on March 15. Date General Journal Description Debit Credit Dec 15 Inventory Accounts payable Dec 31 Foreign currency transaction loss Accounts payable Mar 15 Accounts payable 16,100 = = 0✓ 16,100 く 2,450 0✓ 2,450 ✓ 28,000 x Foreign currency transaction gain く 0✓ 10,500 x Cash 0✓ 17,500 ✓

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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