Prepare the journal entries to record and translate the creditor’s balance between 1 January 2021 and 31 December 2022. The company’s year-end date is 31 December. Round all answer to the nearest rand. Journal narrations are not required.
Whilst on holiday in England your business partner decided to purchase some
furniture for the buildings. He bought £250 000 worth of furniture on 1 January
2021. The £250 000 was only payable on 31 December 2022. The following
exchange rates are applicable:
Date -Exchange rate (R/£)
1 January 2021 - R20.75
31 December 2021 - R21.45
31 December 2022 - R19.80
REQUIRED:
Prepare the
between 1 January 2021 and 31 December 2022.
The company’s year-end date is 31 December.
Round all answer to the nearest rand.
Journal narrations are not required.
Answer to the fallowing above question:
In the above question is based on foreign exchange rates then the journal entries are as fallows
Furniture purchased for building $250000
On January 1 and the payment is made on 31 December 2022
On January 1,2021 furniture purchased:
Furniture account Dr 5187500.00
To creditors account 5187500.00
(£250000*20.75)
In Dec 31,2021: journal entry is :
The exchange rate is 21.45 per £
Foreign exchange loss A/c Dr 175000.00
To creditors account 175000.00
(£250000*(21.45-20.75)per £)
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