Indicate how each of the following international transactions is entered into th
ID: 1160257 • Letter: I
Question
Indicate how each of the following international transactions is entered into the Canadian balance of payments with double-entry bookkeeping. Your records should include a description of the transaction being recorded, which specific account is affected (e.g., export, home financial account asset, etc.), and the accompanying credit/debit entry.
Example: A Canadian airplane manufacturer imports $5 million in parts from a U.S. firm. It uses a Canadian bank account to pay for the parts.
Example Answer:
Description
BOP Account
Account (detail)
Credit (+)/Debit (-)
Import of airplane parts from U.S.
Current account (decreases)
Canadian imports increase
-$5 million
U.S. firm’s claim on Canadian deposits
Financial account (increases)
U.S. exports increase
+$5 million
A. An Italian tourist charges $450 to his Mastercard (issued by an Italian bank) for a hotel room in Jasper, Alberta, Canada.
B. A Chinese catering company purchases $200,000 worth of helium tanks from a Canadian welding firm. The Chinese catering company uses deposits from a bank in China.
C. A French firm forgives a $250,000 loan to a firm located in in the town of Lac-Mégantic, Quebec, following a deadly rail accident.
D.Canada donates $10 million in medical and food supplies to Ukraine following a month-long war.
Description
BOP Account
Account (detail)
Credit (+)/Debit (-)
Import of airplane parts from U.S.
Current account (decreases)
Canadian imports increase
-$5 million
U.S. firm’s claim on Canadian deposits
Financial account (increases)
U.S. exports increase
+$5 million
Explanation / Answer
question # Description BOP Account Account detail Credit/ Debi 1 An Italian tourist charges $450 to his Mastercard (issued by an Italian bank) for a hotel room in Jasper, Alberta, Canada. current a/c Italian import increase, canadian exports increase +$450 2 A Chinese catering company purchases $200,000 worth of helium tanks from a Canadian welding firm. The Chinese catering company uses deposits from a bank in China. current account canadian exports increase +200,000 3 A French firm forgives a $250,000 loan to a firm located in the town of Lac-Mégantic, Quebec, following a deadly rail accident. capital A/c a loan not required to be paid, level of forex unchanged, and thus is a credit in capital-account +250000 4 Canada donates $10 million in medical and food supplies to Ukraine following a month-long war. - no change as it isnt sold, but used for charity