Accounting homework help.
Foreign Currency Transactions
For this assignment, use your Fundamentals of Advanced Accounting text to complete the following:
- Problem 27 on page 376. This problem tests your ability to prepare financial statement balances for foreign currency transactions.
- Problem 28 on page 377. This problem tests your ability to prepare journal entries related to foreign currency borrowing.
Voltac Corporation (a U.S. company located in Charlotte, North Carolina) has the following import/export transactions denominated in Mexican pesos in 2017:
| March 1 | Bought inventory costing 100,000 pesos on credit. |
| May 1 | Sold 60 percent of the inventory for 80,000 pesos on credit. |
| August 1 | Collected 70,000 pesos from customers. |
| September 1 | Paid 60,000 pesos to suppliers. |
| March 1 | $0.10 |
| May 1 | 0.12 |
| August 1 | 0.13 |
| September 1 | 0.14 |
| December 31 | 0.15 |
For each of the following accounts, how much will Voltac report on its 2017 financial statements?
- Cost of Goods Sold.
- Accounts Receivable.
- Accounts Payable.
On April 1, 2017, Mendoza Company borrowed 500,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2017, and will make a second interest payment on March 31, 2018, when the loan is repaid. Mendoza prepares U.S.-dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro:
| April 1, 2017 | $1.10 |
| October 1, 2017 | 1.20 |
| December 31, 2017 | 1.24 |
| March 31, 2018 | 1.28 |
