Question
On 5 September 2014 Russell Ltd places an order for 500 000 of inventory from a Swedish supplier. The terms for the purchase of the
On 5 September 2014 Russell Ltd places an order for 500 000 of inventory from a Swedish supplier. The terms for the purchase of the goods are that they are f.o.b. shipping point and they are to be paid for on 5 November. The financial controller of Russell Ltd enters into a forward-exchange contract on 5 September and designates it as a hedge for the purchase. The forward-exchange contract is for 500 000 to be supplied by the bank on 5 November 2014. The goods are shipped on 5 October 2014 and are paid for on 5 November. What are the journal entries to record the above transactions from 5 September through to 5 October in accordance with AASB 121 (rounded to the nearest whole A$)?
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