Topic 5: Accounting for foreign currency transactions Soul Ltd is an Australian

Question

Topic 5: Accounting for foreign currency transactions Soul Ltd is an Australian company that makes and sells small electronic goods and its financial year ends on 30 June. On 1 February 2018, a customer from the United States ordered some goods from Soul Ltd at an invoice cost of Us$400,000 on terms FOB destination. On 30 April 2018, the goods were delivered to the customer. The agreed payment arrangements are that 30% of he total amount owing would be paid on del er 20% hree months after delivery, and remaining o urmo ns after de The end of a per Or is 3 n The following exchange rates are applicable February 2018 April 2018 S1-USS0.70 $1 US50.74 Required: In accordance with AASB 121, prepare the relevant journal entries of Soul Ltd to account for the above transactions.

Explanation / Answer

. 1st feb 2018

Soul ltd a/c dr. 519481

To export sales a/c 519481

30th April

Bank a/c 160000

To soul ltd a/c. 160000

30th june

Soul ltd a/c. 19600

To foreign exchange

Gain a /c. 19600

31st july

Bank a/c 108108

To soul ltd a/c. 108108

31st august

Bank a/c 256410

To soul ltd a/c. 256410

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