1 answer

Exercise 12-2 During December of the current year, Teletex Systems, Inc., a company based in Seattle,...

Question:

Exercise 12-2

During December of the current year, Teletex Systems, Inc., a company based in Seattle, Washington, entered into the following transactions:
Dec. 10 Sold seven office computers to a company located in Colombia for 9,036,000 pesos. On this date, the spot rate was 360 pesos per U.S. dollar.
12 Purchased computer chips from a company domiciled in Taiwan. The contract was denominated in 590,000 Taiwan dollars. The direct exchange spot rate on this date was $0.0387.
Prepare journal entries to record the transactions above on the books of Teletex Systems, Inc. The company uses a periodic inventory system.

Date

Account Titles and Explanation

Debit

Credit

Entry field with correct answer Dec. 10Dec. 12

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Entry field with correct answer

Entry field with correct answer Dec. 10Dec. 12

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(b)

Correct answer. Your answer is correct.
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 $0.00262
Taiwan dollar $0.0347

Date

Account Titles and Explanation

Debit

Credit

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(c)

Correct answer. Your answer is correct.
Prepare journal entries to record settlement of both open accounts on January 10. Assume that the direct exchange rates on the settlement dates were as follows:
Colombia peso $0.00315
Taiwan dollar $0.0394

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Collapse question part(d) (NEED HELP WITH D)

Partially correct answer. Your answer is partially correct. Try again.
Prepare journal entries to record the December 10 transaction, adjust the accounts on December 31, and record settlement of the account on January 10, assuming that the transaction was denominated in dollars rather than pesos. Assume the same exchange rates as those given. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Entry field with correct answer Jan. 10Dec. 10Dec. 31

Entry field with correct answer

Entry field with correct answer

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Entry field with correct answer

Entry field with correct answer Jan. 10Dec. 10Dec. 31

Entry field with incorrect answer

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Entry field with correct answer Jan. 10Dec. 10Dec. 31

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Entry field with incorrect answer now contains modified data

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SHOW LIST OF ACCOUNTS

LINK TO TEXT

Attempts: 3 of 5 used

(NEED HELP WITH D. )


Answers

Since the transaction is assumed to be denominated in dollars that means both parties have agreed for settlement in dollars itself. Therefore the rate at which the transaction is first recorded on Dec.10 will be the same amount which will be settled for on Jan.10 As such we will record the transaction in dollars using the spot rate on 10th Dec, there will be no requirement for adjustment on 31 Dec as the currency is denominated in dollars and on 10 Jan the same is settled in full. Below are the entries:

Dec.10 Accounts Receivable $25,100

To Sales $25,100

(Being recording of sales transaction of 7 computers for 9,036,000 [email protected] 360 pesos per dollar)

Dec.31 No entry $0

(No entry required for adjustment as on 31. Dec since the transaction is denominated in dollars hence no transaction gain or loss)

Jan. 10 Cash $25,100

  To Accounts Receivable $25,100

(Being settlement of sale transaction fully in cash)

.

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