Bartlett Company, headquartered in Cincinnati, Ohio, has occasional transactions with companies in a foreign country whose currency is the lira. Prepare journal entries for the following transactions in U.S. dollars. Also prepare any necessary adjusting entries at December 31 caused by fluctuations in the value of the lira. Assume that the company uses a perpetual inventory system.
Transactions in 2011
1-Feb
Bought equipment for 40,000 lira on credit.
1-Apr
Paid for the equipment purchased February 1.
1-Jun
Bought inventory for 30,000 lira on credit.
1-Aug
Sold 70 percent of inventory purchased June 1 for 40,000 lira on credit.
1-Oct
Collected 30,000 lira from the sales made on August 1, 2011.
1-Nov
Paid 20,000 lira on the debts incurred on June 1, 2011.
Transactions in 2012
Collected remaining 10,000 lira from August 1, 2011, sales.
1-Mar
Paid remaining 10,000 lira on the debts incurred on June 1, 2011.
Currency exchange rates for 1 lira for 2011
$0.44
0.45
0.47
0.48
0.49
0.5
31-Dec
0.52
Currency exchange rates for 1 lira for 2012
$0.54
0.55
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here