Question

Bristols Furs imports furs from Canada. In the space provided below, prepare Journal Entries to record the following events..

Dec. 11^th :    Bristols Furs purchased furs from Trappers, Ltd., a Canadian corporation, at a price of 55,000 Canadian dollars, due in 60 days. The current exchange rate is

$0.80 USD per Canadian dollar.

Dec. 31^st :     Bristols Furs made a year-end adjusting entry relating to the account payable to Trappers. The exchange rate at year-end is $0.90 USD per Canadian dollar.

Feb. 09^th :     Bristols Furs issued a check for $46,750 (USD) to National Bank in full settlement of the liability to Trappers, Ltd. The exchange rate at this date is $0.85 USD per Canadian dollar.

Journal
Date		Account Titles	Debit	Credit

Answer 1

Dec.11th on the date of purchase

Fur Purchases A c Dr 44000 $

To Crediotrs (Trappers.Ltd ) Ac 44000 $

1 CAN $ =0.8 US $

55000 CAN $=44000 US $

ON 31.st Dec- Adjustment Entry

Creditors (Trappers ltd ) Ac Dr 49500 $

To Creditors payble ac 49500 $

1 can $ = 0.9 $

55000 can $ =49500 $

EXCHANGE LOSS :entry for exchane loss recognised==49500-44000 =5500 $

Exchange loss aCCOUNT dr 5500 $

To creditors (Trappers ltd ) 5500 $

0n. 2nd FEB

Creditors payable Account Dr 46750 $

TO cash paid 46750 $

being final settlemnt done

exchange gain =49500 $-46750 $=2250 $

Creditors payable acount Dr 2250 $

To Exchange Gain 2250 $

net exchange loss =5500-2250

2250

loss transfeed to profit and loss account

Profit and loss account Dr 2250 $

To Exchange Loss 2250 $

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