Share
Explore BrainMass

Journal entries for Texana Inc. And year-end adjustments.

Please explain the attached problem. Any examples would be greatly appreciated. Thank you.

Texana Inc. imports inventory from Mexico. Prepare the journal entries for Texana to record the following transactions. Include any year-end adjustments.

Attachments

Solution Preview

Texana Inc. imports inventory from Mexico. Prepare the journal entries for Texana to record the following transactions. Include any year-end adjustments.

Dec 21 Purchased inventory from Acquilla Co for 500,000 Mexican pesos. The exchange rate was $0.0914 per peso. The ...

Solution Summary

Dec 21:
Entry:

Dr Inventory/Purchases $45,700
Cr Accounts payable - Acquilla Co $45,700
(Being, inventory purchase and liability towards inventory purchases recorded)

Dec 31
Entry:

Dr Currency exchange loss $150
Cr Accounts payable - Acquilla Co $150
(Being, currency exchange loss on foreign currency monetary liability recorded)

Jan 20
Entry:

Dr Currency exchange loss $ 150
Dr Accounts payable - Acquilla Co $45,850
Cr Cash $46,000

(Being, settlement of foreign currency monetary liability recorded)

$2.19