Charin Corporation, a U.S. corporation, imports and exports small electronics. On December 1, 2014, Charin purchased components from an Egyptian manufacturer amounting to 500,000 Egyptian pounds. The purchase is payable in Egyptian pounds. At December 30, Charin wanted to take advantage of favorable exchange rates but did not have the full amount required to pay off the entire amount. Charin wired the funds to pay off half of the balance owed and expected to pay the remaining balance on January 3, 2015. Charin paid the remaining balance on January 3, 2015. The respective exchange rates were as follows: December 1, 2014 1 pound = $.170 December 30, 2014 1 pound = $.165 December 31, 2014 1 pound = $.175 January 3, 2015 1 pound = $.180 Document the journal entries related to these transactions for the four dates shown. If no entry is required, record "no entry."
Charin Corporation, a U.S. corporation, imports and exports small electronics. On December 1, 2014, Charin purchased components from an Egyptian manufacturer amounting to 500,000 Egyptian pounds. The purchase is payable in Egyptian pounds. At December 30, Charin wanted to take advantage of favorable exchange rates but did not have the full amount required to pay off the entire amount. Charin wired the funds to pay off half of the balance owed and expected to pay the remaining balance on January 3, 2015. Charin paid the remaining balance on January 3, 2015.
The respective exchange rates were as follows:
December 1, 2014 1 pound = $.170
December 30, 2014 1 pound = $.165
December 31, 2014 1 pound = $.175
January 3, 2015 1 pound = $.180
Document the
1. Conversion of purchase of components from an Egyptian Manufacturer:
500,000 Egyptian pounds x 0.170 = $85000
(Exchange rate on the date of purchase)
2.Only half Balance is paid at the time of Purchase. Half of Purchased amount balance to be paid in January 3 2015
$85000/2 = $42,500
Exchange rate on Dec 30, 2014 = 0.165
500,000Egyptian pounds x1/2x 0.165 = $41250
3.Remaining Portion of 500,000 is paid on January 3 2015 when exchange rate is 1 Pound = $0.180
Remaining Balance due in dollars = $42,500
$250,000 Egyptian pounds x $0.180 = 45000
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