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P2-D2.
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- October 6, 2022 at 7:58 am #667965
Trucking Solutions Ltd (Trucking-Solutions) is a company listed in the Zimbabwe Stock exchange and conducts its business from its head office in Harare.
The company purchased its inventory from Part-Quip Pty South Africa at a cost of ZAR 2 000 000 on 30 June 2017 when the exchange rate was $1 = ZAR 1. According to the contract, the supplier will be paid on 31 December 2019.
There was no forward cover taken out for the transaction and Trucking-Solutions Ltd uses the perpetual system to account for all its inventories. The following exchange rates are applicable.
31 December 2017 ZWL $1 = ZAR 0.8
31 December 2018 ZWL $1 = ZAR 1
31 December 2019 ZWL $1 = ZAR 1.2575% of inventory was sold in year 2017 while 25% was sold in year 2018. It is the policy of Trucking-Solutions to price all its inventory at cost plus 50% mark-up.
Required
Prepare the relevant journals to account for the above transactions from years 2017 to 2019.30/06/17
Inventory $2 000 000 DR
Part-Quip Pty $2 000 000 CR
Being the purchase of inventory at $1:ZAR131/12/17
Forex difference(loss) $500 000 DR
Part-Quip Pty $500 000 CR31/12/17
Bank $2 250 000 DR
Sales $2 250 000 CR31/12/18
Part-Quip Pty $500 000 DR
Forex difference(gain) $ 500 000 CRBank $750 000 DR
Sales $750 000 CR31/12/19
Part-Quip Pty $2 000 000 DR
Forex difference(gain)$ 400 000 CR
Bank $1 600 000 CRHow correct am I?
October 11, 2022 at 8:27 pm #668341Hi,
You’d need to show me the calculations for your gains/losses for the exchange differences and to show how you’ve calculated the sales figures so that I can see if they’re right. Aside from that you seem to have the right principles.
Thanks
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