Question
Gemella Ltd. manufactures construction equipment for sale throughout Eastern Canada and the Northeastern United States. Its year-end is June 30. The following foreign currency transactions
Gemella Ltd. manufactures construction equipment for sale throughout Eastern Canada and the Northeastern United States. Its year-end is June 30. The following foreign currency transactions occurred during the Year 1 calendar year:
- On January 10, Gemella agreed to sell equipment to an American customer for US$260,000 for delivery on or before March 31 and received a deposit of US$26,000. The balance is payable on July 31.
- On March 17, the equipment was delivered to the American customer.
- On May 1, Gemella purchased 100 acres of land in Syracuse, New York, for US$360,000 as a long-term investment. Fifty percent of the purchase price was paid on May 1. The balance is due on May 1, Year 2, along with interest at the rate of 6%.
- On June 30, the 100 acres of land had a market value of US$230,000. Gemella reports its long-term investments in land at historical cost and discloses the market value of the land in the notes to its financial statements.
- On July 31, the balance owing was received from the American customer.
The following spot rates exist during the period January to July, Year 1:
Spot Rates | |
January 10, Year 1 | US$1 = C$1.65 |
March 17, Year 1 | US$1 = C$1.66 |
May 1, Year 1 | US$1 = C$1.68 |
June 30, Year 1 | US$1 = C$1.72 |
July 31, Year 1 | US$1 = C$1.74 |
Exchange rates changed evenly between the dates indicated above.
Required:
(a) Prepare the journal entries for the transactions stated above including year-end adjusting entries. (Round your answers to 2 decimal places.)
Date | General Journal | Debit | Credit |
January 10, Year 1 | (Click to select) Accounts receivable Inventory Purchase Exchange gains and losses Notes receivable Receivable from bank Cash Land Equipment | ||
(Click to select) Bills payable Accounts payable Notes payable Exchange gain Payable to bank Sales Deferred revenue Loan payable Interest receivable | |||
Record receipt of deposit. | |||
March 17, Year 1 | (Click to select) Purchase Cash Accounts receivable Notes receivable Inventory Receivable from bank Equipment Land | ||
(Click to select) Notes payable Exchange gain Bills payable Interest receivable Payable to bank Loan payable Deferred revenue Sales Accounts payable | |||
(Click to select) Notes payable Exchange gain Accounts payable Payable to bank Sales Interest receivable Deferred revenue Loan payable Bills payable | |||
Record the sales. | |||
May 1, Year 1 | (Click to select) Receivable from bank Land Exchange loss Equipment Inventory Purchase Notes receivable Accounts receivable | ||
(Click to select) Bonds Exchange gain Loan payable Cash Sales Interest receivable Notes payable Bills payable | |||
(Click to select) Notes payable Sales Bills payable Accounts payable Loan payable Interest receivable Deferred revenue Exchange gain Payable to bank | |||
Record the purchase of land. | |||
June 30, Year 1 | (Click to select) Land Accounts receivable Inventory Purchase Receivable from bank Notes receivable Equipment Exchange loss | ||
(Click to select) Sales Exchange gain Loan payable Interest receivable Payable to bank Accounts payable Notes payable Bills payable | |||
Record the exchange gain. | |||
(Click to select) Land Purchase Notes receivable Receivable from bank Accounts receivable Equipment Inventory Accounts payable Exchange loss | |||
(Click to select) Bills payable Sales Notes payable Accounts payable Interest receivable Payable to bank Exchange gains and losses Loan payable | |||
Record the exchange gain or loss on purchase of land. | |||
(Click to select) Inventory Accounts receivable Notes receivable Receivable from bank Land Purchase Equipment Interest expense | |||
(Click to select) Land Notes receivable Accounts receivable Cash Inventory Purchase Equipment Exchange loss Receivable from bank | |||
(Click to select) Forward contract Interest payable Loan payable Exchange gain Notes payable Sales Interest receivable Bills payable Accounts payable | |||
Record the interest expense. | |||
July 31, Year 1 | (Click to select) Exchange gains and losses Receivable from bank Purchase Notes receivable Inventory Equipment Accounts receivable Land | ||
(Click to select) Interest receivable Exchange gain Loan payable Bills payable Notes payable Notes receivable Accounts receivable Accounts payable | |||
Record the exchange gain. | |||
(Click to select) Accounts payable Equipment Cash Accounts receivable Inventory Land Notes receivable Purchase Receivable from bank | |||
(Click to select) Accounts receivable Notes payable Sales Loan payable Cash Exchange gain Interest receivable Bills payable Accounts payable | |||
Record the receipt of cash. | |||
(b) What value will be disclosed in the notes to the year-end financial statements pertaining to the land purchased in Syracuse? (Omit $ sign in your response.)
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