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Journal Entries for Foreign Transactions

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USA Posh Puppies has the following foreign transactions during 20X8:

-USA Posh Puppies purchased 10,000 collars on December 2 from Bling and Things, Inc., a firm based in Mexico, at an invoice price of 7,500 pesos. The pot rate was $0.064. Payment is due January 2, 20X9
-USA Posh Puppies sold 1,000 rhinestone-studded collars on December 20 to Divine Dogs, a pet shop in Canada, for $1,500 Canadian dollars. The spot rate was $0.810. The invoice is denominated in Canadian dollars and is due on January 20, 20X9.
-On December 31, 20x8, the currency exchange rate for pesos was $0.070 and for Canadian dollars was $0.80.
-The exchange rate for pesos on January 2, 20x9, was $0.0725, and the exchange rate for Canadian dollars on January 20, 20x9, was $0.820.
Prepare the following journal entries:

-Prepare the journal entry for USA Posh Puppies to reflect the above accounting events.
-Prepare the adjusting journal entries necessary for December 31, 20x8.
-Prepare the journal entries to record the payment of the invoice to Bling and Things and to record the receipt of the Divine Dogs payment.

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Solution Summary

The expert examines journal entries for foreign transactions. The exchange rates for adjusting journal entries are determined.

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