Cameron Enterprises conducted two foreign-currency transactions on September 1, Year 2.

In the first transaction, it sold E750,000 (E represents Euro) in merchandise to a foreign company.Cameron agreed to a note receivable for collection of the receivable. The note receivable was due on September 1, Year 6.The foreign company is well established and there is no risk of default. The note has an interest rate of 10 percent per year, payable at December 31, each year. Both the interest and the note will be paid in Euros.This receivable is not hedged in any way.

In the second transaction, Cameron purchased SF1,200,000 worth of inventory from a country in another foreign country.This amount is payable on November 1, Year 3.There is no interest on this liability and it is not hedged.

Exchange Rates

September 1, Year 2 Spot Rate $1 = E 2.5 $1 = SF3.9

December 31, Year 2 Spot Rate $1 = E 2.8 $1 = SF3.4

Year 2 Average Rate $1 = E 2.3 $1 = SF4.1

Sept. - Dec, Year 2 Average Rate $1 = E 2.6 $1 = SF3.6

November 1, Year 3 Spot Rate $1 = SF3.1

December 31, Year 3 Spot Rate $1 = E 3.6

Year 3 Average Rate $1 = E 3.0

Required:

Prepare all the journal entries for Years 2 and 3 for the two transactions.First complete transaction 1 as part 1 and then transaction 2 as part 2.Assume a December 31 year end.