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    2-Quiz Chapter 9 Foreign Currency Transaction

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    This document provides three examples of foreign currency transactions for three US companies - Burj Company, Drive Company, and Arise Corporation. It includes currency exchange rates on relevant transaction dates and asks the reader to prepare related journal entries for each company and analyze the effect of currency fluctuations on their income statements.

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    2-Quiz Chapter 9 Foreign Currency Transaction

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    This document provides three examples of foreign currency transactions for three US companies - Burj Company, Drive Company, and Arise Corporation. It includes currency exchange rates on relevant transaction dates and asks the reader to prepare related journal entries for each company and analyze the effect of currency fluctuations on their income statements.

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    This document provides three examples of foreign currency transactions for three US companies - Burj Company, Drive Company, and Arise Corporation. It includes currency exchange rates on relevant transaction dates and asks the reader to prepare related journal entries for each company and analyze the effect of currency fluctuations on their income statements.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    296 views2 pages

    2-Quiz Chapter 9 Foreign Currency Transaction

    Uploaded by

    noproblem 5555
    This document provides three examples of foreign currency transactions for three US companies - Burj Company, Drive Company, and Arise Corporation. It includes currency exchange rates on relevant transaction dates and asks the reader to prepare related journal entries for each company and analyze the effect of currency fluctuations on their income statements.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Quiz Chapter 9 Foreign Currency Transaction, 21 June 2019

    Time 14.00-15.00
    Closed Book and Gadget also

    =Bismillahirrahmaanirrahim=

    1. On December 20, 2015, Burj Company (a U.S. company headquartered in Miami,


    Florida) sold parts to a foreign customer at a price of 50,000 ostras. Payment is
    received on January 10, 2016. Currency exchange rates for 1 ostra are as follows:
    December 20, 2015 $ 1.05
    December 31, 2015 1.02
    January 10, 2016 0.98
     Prepare all journal entries for Burj Company
     How does the fluctuation in exchange rates affect Burj’s 2015 income
    statement?
     How does the fluctuation in exchange rates affect Burj’s 2016 income
    statement?

    1. On December 1, 2015, Drive Company (a U.S. company located in Alaska, US)


    purchases inventory from a foreign supplier for 60,000 local currency units (LCU).
    Drive will pay in 90 days after it sells this merchandise. It makes sales rather quickly
    and pays this entire obligation on January 28, 2016. Currency exchange rates for 1
    LCU are as follows:
    December 1, 2015 $ 0.88
    December 31, 2015 0.82
    January 28, 2016 0.90

     Prepare all journal entries for Dresden Company in connection with the
    purchase and payment.
    2. Arise Corporation (a U.S. company located in California) has the following import/
    export transactions in 2015:
    March 1 Bought inventory costing 50,000 pesos on credit.
    May 1 Sold 60 percent of the inventory for 45,000 pesos on credit.
    August 1 Collected 40,000 pesos from customers.
    September 1 Paid 30,000 pesos to creditors.

    Currency exchange rates for 1 peso for 2015 are as follows:


    March 1 $0.17
    May 1 0.18
    August 1 0.19
    September 1 0.20
    December 31 0.21
     Prepare all journal entries
     For each of the following accounts, how much will Arise report on its 2015
    financial statements?
    o Inventory.
    o Cost of Goods Sold.
    o Sales.
    o Accounts Receivable.
    o Accounts Payable.
    o Cash

    = Alhamdulillah=

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