Q13:

X imports and sells PCs. During December of the current year 2020, X (American), entered into the following transaction: On 2 December 2020, X purchased computer equipment from a Taiwan company. Contract was denominated in 500000 Taiwan dollar. Direct exchange rate on this date was each Taiwan dollar = $0.0395 (Spot). On 31 December 2020, suppose that the exchange rate was [1 Taiwan dollar = $0.0351]. On 1 March 2021, X paid the due amount. The exchange rate is 0.0398. The journal entry on 2 December 2020 is

a.

Dr. Purchases $19550 and Cr. Account Payable $19550

b.

Dr. Purchases $18798 and Cr. Account Payable $18798

c.

Dr. Purchases $19750 and Cr. Account Payable $19750

d.

Dr. Purchases $16500 and Cr. Account Payable $16500