Question 3 10 Marks Paddington Ltd is an Australian company that uses the Australian dollar (AUD) as its functional currency and has a 30 June reporting date. The following events and transactions occurred between May and July 2018: Sold inventory to a United States customer, Liberty Ltd, for the agreed price of USD 65,000. The sales contract is FOB shipping point. The purchase order was received by Paddington Ltd on 11 May 2018 and the inventory was shipped on 20 May 2018. Liberty Ltd received the inventory into its northern region warehouse on 20 June 2018 and paid USD 65,000 to Paddington Ltd on 21 July 2018. Borrowed USD 195,000 from CitiBank, a financial institution in the United States on 1 June 2018. On 30 June 2018, outstanding interest on the loan was USD 13,000. Purchased inventory from a European supplier, Koenig GmbH, for the agreed price of EUR 60,000. The purchase contract is FOB shipping point. The inventory was ordered by Paddington Ltd on 5 June 2018 and shipped by Koenig GmbH on 10 June 2018. Paddington Ltd received the inventory into its Queensland factory on 15 July 2018 and paid EUR 60,000 to Koenig GmbH on 25 July 2018. The following exchange rates are available: Date 20 May 2018 Exchange Rate AUD 1 = USD 0.80 1 June 2018 AUD 1 = USD 0.75 10 June 2018 AUD 1 = EUR 0.60 30 June 2018 AUD 1 = EUR 0.50 AUD 1 = USD 0.65 21 July 2018 AUD 1 = USD 0.50 25 July 2018 AUD 1 = EUR 0.30 Question 3 continued over next page Question 3 (continued) Required Provide the journal entries for Paddington Ltd to account for the above transactions and events. For the sale of inventory to the United States customer, ignore the journal entry to recognise cost of goods sold expense. Question 3 10 Marks Plus Fashions Ltd is an Australian company that uses the Australian dollar (AUD) as its functional currency and has a 30 June reporting date. The following events and transactions occurred between May and August 2019: . 19 May: sold inventory to a United States customer, Jefferson Designs Ltd, for the agreed price of USD 90,000. 1 June: borrowed USD 180,000 from CitiBank, a financial institution in the United States. . 10 June: purchased inventory from a European supplier, EuroFash GmbH, for the agreed price of EUR 50,000. 30 June: outstanding interest on the loan from Citibank was USD 6,000. 21 July: received USD 90,000 from Jefferson Designs Ltd. . 25 August: paid EUR 50,000 to EuroFash GmbH. The following exchange rates are available: Date 19 May 2019 Exchange Rate AUD 1 = USD 0.90 1 June 2019 AUD 1 = USD 0.80 10 June 2019 AUD 1 = EUR 0.80 30 June 2019 AUD 1 = USD 0.75 AUD 1 = EUR 0.50 21 July 2019 AUD 1 = USD 0.60 25 August 2019 AUD 1 = EUR 0.40 Required Provide the journal entries for Plus Fashions Ltd to account for the above transactions and events. For the sale of inventory to the United States customer, ignore the journal entry to recognise cost of goods sold expense
