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