Question
Journal entries for an accounts payable denominated in Canadian Dollars ($US strengthens and weakens) Assume that your company purchases inventories from a Canadian supplier on
Journal entries for an accounts payable denominated in Canadian Dollars ($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 $90,000 (CAD). Your company operates on a calendar year basis.
Assume the following exchange rates:
November 3 | $0.74:CAD$1 |
December 31 | $0.69:CAD$1 |
February 1 | $0.71: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 | AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales | Answer | Answer |
AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales | Answer | Answer | |
12/31 | AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales | Answer | Answer |
AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales | Answer | Answer | |
2/1 | Accounts payable | Answer | Answer |
AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales | Answer | Answer | |
AnswerAccounts payableAccounts receivableCashForeign currency transaction gainForeign currency transaction lossForward contract (asset)Forward contract (liability)Hedged firm commitment (asset)Hedged firm commitment (liability)InventoriesSales | Answer | Answer |
Please answer all parts of the question.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started