Question

Pinnacle Foods imports a variety of items for resale to U.S. retailers. Following is a description of purchases and foreign-currency-denominated payments made in the last accounting period, plus the direct exchange rates for each date:
Country	Amount	Currency	Spot rate at purchase	Spot rate at payment
Argentina	250,000	Peso	$0.06	$0.05
Canada	400,000	Dollar	0.732	0.713
India	300,000	Rupee	0.016	0.018
South Africa	100,000	Rand	0.074	0.077
Required
Prepare the journal entries made by Pinnacle, a U.S. company, to record the above purchase and payment transactions.
South Africa
Description		Debit	Credit
A/p OR Cash OR Gain OR Loss Or Forgein Currency or Inventory		?	?
A/p OR Cash OR Gain OR Loss Or Forgein Currency or Inventory		?	?
To record purchase of inventory
A/p OR Cash OR Gain OR Loss Or Forgein Currency or Inventory		?	?
A/p OR Cash OR Gain OR Loss Or Forgein Currency or Inventory		?	?
To record purchase sufficient foreign currency to pay supplier.
A/p OR Cash OR Gain OR Loss Or Forgein Currency or Inventory		?	?
A/p OR Cash OR Gain OR Loss Or Forgein Currency or Inventory		?	?
	Foreign Currency	?	?
To record payment of liability to supplier.

Answer 1

No.	Description	Debit	Credit
1	Inventory (250000*.06)	$    15,000.00
	A/P		$    15,000.00
	(To record purchase of Inventory)
2	Forgein Currency (250000*.05)	$    12,500.00
	Cash		$    12,500.00
	(To Record Purchase of FC)
3	A/P	$    15,000.00
	Gain		$      2,500.00
	Forgein Currency		$    12,500.00
	(To Record Payment)

No.	Description	Debit	Credit
1	Inventory (400000*0.732)	$ 2,92,800.00
	A/P		$ 2,92,800.00
	(To record purchase of Inventory)
2	Forgein Currency (400000*0.713)	$ 2,85,200.00
	Cash		$ 2,85,200.00
	(To Record Purchase of FC)
3	A/P	$ 2,92,800.00
	Gain		$      7,600.00
	Forgein Currency		$ 2,85,200.00
	(To Record Payment)

No.	Description	Debit	Credit
1	Inventory (300000*0.016)	$      4,800.00
	A/P		$      4,800.00
	(To record purchase of Inventory)
2	Forgein Currency (300000*0.018)	$      5,400.00
	Cash		$      5,400.00
	(To Record Purchase of FC)
3	A/P	$      4,800.00
	Loss	$         600.00
	Forgein Currency		$      5,400.00
	(To Record Payment)

No.	Description	Debit	Credit
1	Inventory (100000*0.074)	$      7,400.00
	A/P		$      7,400.00
	(To record purchase of Inventory)
2	Forgein Currency (100000*0.077)	$      7,700.00
	Cash		$      7,700.00
	(To Record Purchase of FC)
3	A/P	$      7,400.00
	Loss	$         300.00
	Forgein Currency		$      7,700.00
	(To Record Payment)