Question

Johnston Ltd. had the following transactions in 20X5:

a. Sold goods on 1 June to a British customer for 140,000 euros with payment to be in four months.

b. Sold goods to a U.S. customer on 15 June for US$300,000; payment was due in one month.

c. Sold goods to a British customer on 15 July for 40,000 euros; settlement was to be in two months.

d. Received payment from the U.S. customer in (b) on 15 July.

e. Received payment from the British customer in (c) on 15 September.

f. Received payment from the British customer in (a) on 1 October.

 

EXCHANGE RATES:

Required:

Prepare journal entries for the above transactions.

Answer 1

a)    Accounts receivable (140,000 x $1.45)................................... 203,000

            Sales.................................................................................................           203,000

 

b)    Accounts receivable (300,000 x $1.11)................................... 333,000

            Sales.................................................................................................           333,000

 

c)    Accounts receivable (40,000 x $1.42)....................................... 56,800

            Sales.................................................................................................             56,800

 

d)    Cash (300,000 x $1.09)............................................................ 327,000

       Foreign exchange loss............................................................ ..... 6,000

            Accounts receivable.........................................................................           333,000

 

e)    Cash (40,000 x $1.36)................................................................ 54,400

       Foreign exchange loss................................................................. 2,400

            Accounts receivable.........................................................................             56,800

 

f)     Cash (140,000 x $1.32)............................................................ 184,800

       Foreign exchange loss................................................................ 18,200

            Accounts receivable.........................................................................           203,000