Journal entries for an accounts payable denominated in Canadian Dollars ($US strengthens and weakens) Assume that your company purchases inventories from a Canadian supplier on November 3. The invoice specifies that payment is to be made on February 1 in Canadian dollars ($CAD) in the amount of $100,000 (CAD). Your company operates on a calendar year basis. Assume the following exchange rates: November 3 $0.75:CAD$1 December 31 $0.70:CAD$1 February 1 $0.72:CAD$1 Prepare the journal entries to record the purchase (assume perpetual inventory accounting), the required adjusting entry at December 31, and the payment on February 1. Date Description Debit Credit 11/3 Inventories Accounts payable = 12/31 Foreign currency transaction loss = Accounts payable = x 75,000 0 5,000 0 75,000 5,000 2/1 Accounts payable 70,000 Foreign currency transaction gain = x 20,000 x Cash O 72,000 < < <