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Journal Entries for Foreign Transactions

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.

Solution Summary

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