Question 3 [8 marks] Topic 5: Accounting for foreign currency transactions Behap
ID: 2328994 • Letter: Q
Question
Question 3 [8 marks]
Topic 5: Accounting for foreign currency transactions
Behappy Ltd is an Australian company with a reporting period ends on 30 June. The company has entered into two independent transactions denominated in foreign currency as follows.
Behappy Ltd sells some goods on credit on 13 June 2018 to a Singaporean company, Mother Kwan. The contract, denominated in Singapore dollars, amounts to $125,000. Mother Kwan settles the contract on 10 July 2018.
The relevant exchange rates are as follows:
13 June 2018
A$1.00 = S$1.2536
30 June 2018
A$1.00 = S$1.2875
10 July 2018
A$1.00 = S$1.3103
2. On 15 June 2018, Behappy Ltd acquires plant and equipment on credit from Senang Bhd, a Malaysian company. The contract is denominated in Malaysian Ringgit and the acquisition amounts to MYR300,000. Behappy Ltd settles the contract on 20 July 2018.
The relevant exchange rates are as follows:
15 June 2018
A$1.00 = MYR2.8079
30 June 2018
A$1.00 = MYR2.9946
20 July 2018
A$1.00 = MYR2.7152
Required:
In accordance with AASB 121, prepare all relevant journal entries of Behappy Ltd to account for the above transactions.
Question 3
Max. marks allocated
Journal entries for transaction (1)
4
Journal entries for transaction (2)
4
Total
8
13 June 2018
A$1.00 = S$1.2536
30 June 2018
A$1.00 = S$1.2875
10 July 2018
A$1.00 = S$1.3103
Explanation / Answer
1) Journal Entries :-
2) Journal Entries :-
Date Particulars Debit($) Credit($) Jun 13 Trade Receivables A/c Dr. 99713 To Sales A/c ($125000/1.2536) 99713 (To Record Sales at Spot Rate) Jun 30 Unrealised Exchange loss A/c Dr. 2626 To Trade Receivable A/c(99713-(125000/1.2875)) 2626 (To Record Difference parked in unrealised foreign exchange losses) Jul 10 Cash A/c Dr. ($125000/1.3103) 95398 Realised Exchange Loss A/c Dr. (Balanceing Figure) 4315 To Trade Receivable A/c ($125000/1.2875) 97087 To Unrealised Exchange Loss A/c 2626Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.