Reference no: EM132793998

Global Accounting

Independent Man Inc., is a U.S. company that manufactures exercise machines and distributes several lines of imported bicycles. Selected transactions of the company were as follows:

1. Oct 4: Purchased manufacturing equipment from Royal Manufacturing Co., a German company. The purchase price was Euro 200,000, due in 60 days. Current exchange rate,
2. $ 0.7020 per euro.
3. Oct 18: Purchased 1,250 racing bicycles from Ninja Cycles, a Japanese company, at a price of 30,000,000 Japanese yen. Payment is due in 90 days; the current exchange rate is $ 0.0110 per yen.
4. Nov 15: Purchased 500 touring bicycles from Royal Lion Limited, a British corporation. The purchase price was 96,250-pound sterling, payable in 30 days. Current exchange rate, $ 1.65 per British pound.
5. Dec 3: Issued a cheque to First Bank for the U.S. dollar-equivalent of 200,000 Euro in payment of the accounts payable to Royal Manufacturing Co. Current exchange rate $ 0.7110 per euro.
6. Dec 15: Issued a cheque to First Bank for dollar-equivalent of 96,250-pound sterling in payment of the accounts payable to Royal Lion Limited. Current exchange rate, $ 1.60 per British pound.

Required:

Problem 1. Prepare journal entries for the above transactions

Problem 2. Prepare the Dec 31 adjusting entry relating to the accounts payable to Ninja Cycles. The year-end exchange rate is $ 0.0113 per Japanese yen.