Question 1

On 11 April 2018, Ben Limited, a company based in South Africa placed an order for equipment from Jake Limited, a company based in America at the agreed price of $300 000.

On 30 May 2018, the equipment was shipped free on board (FOB) and arrived in South Africa on 5 July 2018. The equipment purchased was installed and available for use on 01 August 2018. Ben Limited agreed to pay Jake Limited in two instalments as follows:

*$200 000 on 31 July 2018

*$100 000 on 15 October 2018

Ben Limited has a 30 September year end. Ben Limited depreciates equipment at 10% per annum using the straight line method.

The relevant exchange rates are as follows:

1$ = R

11 April 2018 1$ = R1.15

30 May 2018 1$ = R1.25

5 July 2018 1$ = R1.10

31 July 2018 1$ = R1.00

01 August 2018 1$ = R0.55

30 September 2018 1$ = R1.50

15 October 2018 1$ = R1.30

30 September 2019 1$ = R1.25

REQUIRED:

Prepare the journal entries for Ben Limited for the years ended 30 September 2018 and 30 September 2019.