During December of the current year, Exide company based in America, entered  into the following transactions;  Dec 10 Sold machinery to company located in Colombia for 6,500,000 pesos. On this date, the spot      rate was 365 pesos per U.S. Dollar. Dec 12 Purchased Machine parts from a company domiciled in Japan. The contract was denominated in 600,000 Japan yen. The direct exchange spot rate on this date was $.0392. Required: Prepare journal entries to record the transactions above on the books of Exide company. The company uses a periodic inventory system. Prepare journal entries necessary to adjust the accounts as of December 31. Assume that on December 31 the direct exchange rates were as follows:                               Colombia peso     $.00265                                Japan yen              .0353 Prepare journal entries to record settlement of both open accounts on January 10. Assume that the direct exchange rates on the settlement dates were as follows:                                Colombia peso   $.00325                                Japan yen             .0396

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
ChapterP2: Part 2: Exchange Rate Behavior
Section: Chapter Questions
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  • During December of the current year, Exide company based in America, entered  into the following transactions;

 Dec 10 Sold machinery to company located in Colombia for 6,500,000 pesos. On this date, the spot      rate was 365 pesos per U.S. Dollar.

Dec 12 Purchased Machine parts from a company domiciled in Japan. The contract was denominated in 600,000 Japan yen. The direct exchange spot rate on this date was $.0392.

Required:

  1. Prepare journal entries to record the transactions above on the books of Exide company. The company uses a periodic inventory system.
  2. Prepare journal entries necessary to adjust the accounts as of December 31. Assume that on December 31 the direct exchange rates were as follows:

                              Colombia peso     $.00265

                               Japan yen              .0353

  1. Prepare journal entries to record settlement of both open accounts on January 10. Assume that the direct exchange rates on the settlement dates were as follows:

                               Colombia peso   $.00325

                               Japan yen             .0396

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