1.Indicate how each of the following international transactions is entered into the Canadian balance of payments with double-entry bookkeeping. Your records should include a description of the transaction being recorded, which specific account is affected (e.g., export, home financial account asset, etc.), and the accompanying credit/debit entry.

Example: A Canadian airplane manufacturer imports $5 million in parts from a U.S. firm. It uses a Canadian bank account to pay for the parts.

Example Answer:

Description

BOP Account

Account (detail)

Credit (+)/Debit (-)

Import of airplane parts from U.S.

Current account (decreases)

Canadian imports increase

-$5 million

U.S. firm's claim on Canadian deposits

Financial account (increases)

U.S. exports increase

+$5 million

a.An Italian tourist charges $450 to his Mastercard (issued by an Italian bank) for a hotel room in Jasper, Alberta, Canada. (2.5 marks)

b.A Chinese catering company purchases $200,000 worth of helium tanks from a Canadian welding firm. The Chinese catering company uses deposits from a bank in China.

(2.5 marks)

c.A French firm forgives a $250,000 loan to a firm located in in the town of Lac-Mgantic, Quebec, following a deadly rail accident. (2.5 marks)

Canada donates $10 million in medical and food supplies to Ukraine following a month-long war.