Question

1. VISA buys the plastic materials to make their credit cards from suppliers in Indonesia. They placed their most recent order on June 15, 20X1 agreeing to pay 40,000 Indonesian Rupiah in 30 days when the bill is due on July 15, 20X1. VISA prepares semiannual reports.

Date	Spot Rate (1 Ind. Rupiah to USD)
06/15/X1	$0.87
06/30/X1	$0.82
07/15/X1	$0.91

Please prepare the journal entries for this transaction
(you can take a picture of your solution written by hand and insert it, if it is easier)

Answer 1

Journal entries

Date	particular.	Lf	Debit ($)	Credit($)
06/15	Purchases/plastic mat Account payables (Being mat. Purchase )		45977.011	45977.011
07/15	Account payables Bank Foreign exhange (Being creditor paid)		45977.011	43956.043 2020.967
Year end	Foreign exchange Profit and loss A/c (Being profit written off)		2020.967	2020.967

Calculation of purchase price of plastic material

Rate of 1 Ind. Rupiah to USD is $0.87

Price of purchase = 40000/.087 = $45977.011

Calculation of amount paid to account payable

Rate of 1 Ind. Rupiah to USD is $0.91

Amount paid to Account receivables= 40000/0.91

= $43956.043