IAS 21 Effects of foreign exchange rates

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 1.25

75% 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:ZAR1

31/12/17

Forex difference(loss) $500 000 DR
Part-Quip Pty $500 000 CR

31/12/17
Bank $2 250 000 DR
Sales $2 250 000 CR

31/12/18

Part-Quip Pty $500 000 DR
Forex difference(gain) $ 500 000 CR

Bank $750 000 DR
Sales $750 000 CR

31/12/19

Part-Quip Pty $2 000 000 DR
Forex difference(gain)$ 400 000 CR
Bank $1 600 000 CR

How correct am I?