Page 364 - FR Integrated Workbook 2018-19
P. 364
Chapter 24
Chapter 11
Example 1
Settled transactions
On 1 April 20X8 Collins Co, a company that uses the dollar ($) as its
functional currency, buys goods from an overseas supplier, who uses Kromits
(Kr) as its functional currency. The goods are priced at Kr54,000. Payment is
made 2 months later on 31 May 20X8.
The prevailing exchange rates are:
1 April 20X8 Kr1.80 : $1
31 May 20X8 Kr1.75 : $1
Required:
Record the journal entries for these transactions.
Solution
1 1 April 20X8 Purchase
Kr54,000 @ 1.80 = $30,000
Dr Purchase $30,000
Cr Payables $30,000
2 31 May 20X8 Payment
Kr54,000 @ 1.75 = $30,857 (amount paid)
Dr Purchases (original figure to clear) $30,000
Dr SPL: Exchange loss (balance) $857
Cr Bank $30,857
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