Question
On November 20, 20X5, Diamond Corporation, a calendar-year US corporation, had merchandise delivered from a vendor in France.The invoice was for 350,000 euro and was
On November 20, 20X5, Diamond Corporation, a calendar-year US corporation, had merchandise delivered from a vendor in France.The invoice was for 350,000 euro and was due January 20, 20X6.On December 13, 20X5, Diamond's British division sold the merchandise and issued the customer an invoice for 400,000 pounds due February 13, 20X6.Both invoices were paid on their due date.Exchange rates were as follows:
Date
Euro
British Pound
November 20, 20X5
$1.1698 E
$1.6356 BP
December 13, 20X5
1.1713 E
1.6317 BP
December 31, 20X5
1.1684 E
1.6286 BP
January 20, 20X6
1.1665 E
1.6334 BP
February 13, 20X6
1.1652 E
1.6293 BP
A.Recordalljournal entries related to the purchase and sales transactions in Diamond Corporation's books on the following dates.Be sure to identify floating amounts with the proper foreign currency (i.e., /euro or /pound) for full credit.Hint - there are 6 journal entries.The journal entry dates are as follows:November 20, 20X5, December 13, 20X5, December 31, 20X5, January 20, 20X6, and February 13, 20X6.
B.Determine thenetexchange gain/(loss) from the above purchase and sale transactions to be included in Diamond's Income Statement for 20X5 and 20X6.Identify whether it is a gain or loss.
20X5 Income Statement
20X6 Income Statement
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