1.On October 1, 2021, a manufacturing company in Egypt imported raw materials of 100,000 $ from the United States by letter of credit and it will pay for the raw materials after 6 months against promissory note. (4.0 marks)

Exchange rates of Egyptian pound against US $ were as follows:

October 1, 2021 15.70

December 31, 2021 15.60

March 31, 2022 18.5

Required:

a. Pass journal entries to record purchasing raw materials.

b. Pass journal entries to record the impact of change in exchange rates at the end of the year.

c. journal entries to record payment of liabilities on March 31, 2022.

Answer:

2. On January 1, 2021 a parent company based in US acquired a subsidiary in Egypt and the following information is extracted from the subsidiary books for 2021: (3.0 marks)

Inventory purchased on Oct. 1 2021.

Purchases of inventory have been made throughout the year.

Uses straight-line depreciation on fixed assets.

Dividends declared and paid on December 1, 2021

Fixed assets have been purchased on Feb. 1, 2021.

Adjusted trail balance as of 31/12/2021 as follows:

1.On October 1, 2021, a manufacturing company in Egypt imported raw materials of 100,000 $ from the United States by letter of credit and it will pay for the raw materials after 6 months against promissory note. (4.0 marks)

Exchange rates of Egyptian pound against US $ were as follows:

October 1, 2021 15.70

December 31, 2021 15.60

March 31, 2022 18.5

Required:

a. Pass journal entries to record purchasing raw materials.

b. Pass journal entries to record the impact of change in exchange rates at the end of the year.

c. journal entries to record payment of liabilities on March 31, 2022.

Answer:

2. On January 1, 2021 a parent company based in US acquired a subsidiary in Egypt and the following information is extracted from the subsidiary books for 2021: (3.0 marks)

Inventory purchased on Oct. 1 2021.

Purchases of inventory have been made throughout the year.

Uses straight-line depreciation on fixed assets.

Dividends declared and paid on December 1, 2021

Fixed assets have been purchased on Feb. 1, 2021.

Adjusted trail balance as of 31/12/2021 as follows:

Account title	Amount in Egyptian pound
Cash	2,000,000
Accounts receivable	2,000,000
Inventory	5,000,000
Notes receivable	1,000,000
Plant assets	10,000,000
dividends	200,000
Cost of goods sold	7,000,000
Depreciation expense	200,000
Other expenses	500,000
Total debits	25,900,000
Sales	10,000,000
Accumulated depreciation	200,000
Accounts payable	3,000,000
Notes payable	1,000,000
Common stocks	9,600,000
Retained earnings	2,100,000
Total credits	25,900,000

Exchange rates:

Date	Exchange rates
January 1, 2021	15.50
Oct. 1 2021	15.60
December 1, 2021	16.50
Feb. 1 2021	17.00
December 31, 2021	17.20
Average	16.36

Required:

Prepare a schedule to translate Subsidiarys financial statements on 31/12/2021 to U.S. dollars using current rate method.