During December of the current year, Teletext System, Inc., a company based in s
ID: 2418929 • Letter: D
Question
During December of the current year, Teletext System, Inc., a company based in seattle, Washington, entered into the following transactions:
12/10 - Sold seven office computers to a. company located in Colombia for 8,541,000 pesos. On this date, the Spot rate was 365 pesos per U.S. dollar.
12/12 - Purchased computer chips from a company domiciled in Taiwan. The contract was denominated in 500,000 Taiwan dollars. The direct exchange Spot rate on the date was $0.0391.
Required:
A. Prepared journal entries to record the above on the books of Teletex Systems, Inc. The company uses a periodic inventory system.
B. Prepare journal entries necessary to adjust the accounts as of December 31. Assume that on December 31 the direct exchange rates were as follows:
Colombia peso $0.00268
Taiwan dollar $0.0351
12/
Explanation / Answer
Transaction rate
Closing rate
Net gain/ (Loss)
Purchase
0.00274
0.00268
.00006
Sale
0.0391
0.0351
.004
Date
Account title
Debit
Credit
12/10
Company in Colombia
$23400
Sale
$23400
12/12
Purchase
$19550
company domiciled in Taiwan
$19550
12/31
Foreign exchange gain
510.12
Company in Colombia
510.12
12/31
company domiciled in Taiwan
$2000
Foreign exchange loss
$2000
Transaction rate
Closing rate
Net gain/ (Loss)
Purchase
0.00274
0.00268
.00006
Sale
0.0391
0.0351
.004
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