In: Accounting
On December 1, year1, Pop Copration( U.S company)sold inventory
to Java A.M. inc. on credit.
?Java A.M will pay Pop corp. 10,000 eruos in 90days. Pop Corp has a
December 31 year-end.
The following rates are known:
?December 1 spot rate: 1USD=1.24 euros
?December 1, 90 day forward rat: 1 USD=1.4 euros
?December 31, spot rate: 1 USD= 1.20 euros
?December 31, 60-day forward rate: 1 USU=1.3 euros
?Prepare Sony Coro. jounral entries, December 1, December 31. March
1st.
Please help me. Thanks!
Journal Entries in the books of Pop Corporation
Date | Particulars | Debit ($) | Credit ($) |
December1 | Java A.M.inc. | 7142.85 | |
To Sales | 7142.85 |
( Being inventory sold booked in the books of Pop Corp in USD. On Dec 1 1USD = 1.24 euros, Thus 10,000 euros = 7142.85 USD ( 10,000/1.24 ) )
Suppose Pop Corporation receives 30,000 euros on December 1 , 30,000 euros on December 31 and 10,000 euros on March 1st then entries will be :
Date | Particulars | Debit ($) | Credit ($) |
December 1 | Bank/Cash | 24,193.54 | |
To Java A.M. inc. | 24,193.54 |
( Being amount paid by Java A.M.inc. On December 1 1USD = 1.24 euros, thus 30,000 euros = 24,193.54 USD ( 30,000/1.24 ) )
Date | Particulars | Debit ($) | Credit ($) |
December 31 | Bank/Cash | 25,000 | |
To Java A.M. inc. | 25,000 |
( Being amount paid by Java A.M.inc. On December 31 1USD = 1.20 euros, thus 30,000 euros = 25,000 USD ( 30,000/1.20 ) )
Date | Particulars | Debit ($) | Credit ($) |
March 1 | Bank/Cash | 7,692.30 | |
To Java A.M. inc. | 7,692.30 |
( Being amount paid by Java A.M.inc. On March 1 1USD = 1.3 euros, thus 10,000 euros = 7,692.30 USD ( 10,000/1.3 ) )
Note : Journal entry of March 1 will not be entered in Year 1 since Pop Corporation is following calander year that is January 1 to December 31 . Hence this entry should not effect the year 1 balances.