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 in an amount of 150,000 Pesos. Your company operates on a calendar year basis.

Assume the following exchange rates and dates:

December 15..$0.04:1 Peso

December 31..$0.05:1 Peso

March 15..$0.06:1 Peso

• The journal entry by your company on December 15, the adjusting entry on December 31, and the payment entry on March 15.
• Note an explanation of the transaction after each journal entry.
• Describe the rationale for each entry, utilizing GAAP standards when possible.