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Prepare the entries to recognize the transactions

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Question - A U.S. company, with an accounting year end of December 31, engages in the transactions indicated below. The company's inventory allocation method is FIFO and they use the perpetual inventory system.

a. On May 20, when the exchange rate was $1.40/£, a U.S. company purchased merchandise from a U.K. supplier for £10,000.

b. On June 5 the U.S. company acquired the required amount of U.K. £s and paid for the merchandise when the exchange rate was $1.38/£.

c. On August 15, when the exchange rate was $1.23/€, the U.S. company sold the merchandise purchased from the U.K. supplier to a customer in Belgium at an invoice price of €16,000.

d. On September 6, when the exchange rate was $1.21/€, the U.S. company received payment of €16,000 from the Belgian customer.

Required - Prepare the entries to recognize the transactions.

Reference no: EM132772776

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