Asked by
Celine Balgobin
on Nov 02, 2024
Verified
On 25 June, Wattle Ltd acquires equipment on credit terms from a New Zealand supplier, Timaru Ltd, for NZ$240 000. The exchange rate at 25 June was NZ$1.00 = A$095. On 30 June the exchange rate is NZ$1.00 = A$0.90. Wattle Ltd pays Timaru Ltd in full on 7 July when the exchange rate is NZ$1.00 = A$0.92. The journal entry recorded by Wattle Ltd for the purchase of the equipment on 25 June is:
A) DR Equipment A$240 000; CR Cash A$240 000
B) DR Equipment A$228 000; CR Payable to Timaru Ltd A$228 000
C) DR Equipment A$216 000; CR Payable to Timaru Ltd A$216 000
D) DR Equipment A$220 800; CR Payable to Timaru Ltd A$220 800
Credit Terms
The conditions, including payment deadlines and interest, under which credit is extended by a seller to a buyer.
Exchange Rate
The price of one country's currency expressed in another country's currency.
- Analyze the repercussions of exchange rate fluctuations on monetary items in foreign currencies across transaction, reporting, and settlement periods.
Verified Answer
SD
Learning Objectives
- Analyze the repercussions of exchange rate fluctuations on monetary items in foreign currencies across transaction, reporting, and settlement periods.
Related questions
At the End of the Reporting Period, a Foreign Currency ...
Outback Limited, an Australian Company, Purchased Machinery from Southern Ranches ...
The Exchange Rate Used at the End of the Reporting ...
On 25 June, Wattle Ltd Acquires Equipment on Credit Terms ...
A US Company Sells Merchandise to a Foreign Company Denominated ...