Acct 1 Summer 2018 30031 Mauricio Duran Quiz: Chapter 11 Quiz Time Remaining: 00

Question

Acct 1 Summer 2018 30031 Mauricio Duran Quiz: Chapter 11 Quiz Time Remaining: 00:54:16 Submit Quiz This Question: 1 pt 2 of 10 (1 completej This Quiz: 10 pts possible Question Help * Providence Systems purchased inventory on account from Megaplex. The price was V150,000, and a yen was quoted at $0.0088. Providence paid the debt in yen a month later when the price of a yen was $0.0093. Providence A. debited Inventory for $1,320. O B. recorded a foreign-currency transaction gain of $75 O C. debited Inventory for $1,395 O D. None of the above. Click to select your answer

Explanation / Answer

The Answer is " A. Debited Inventory for $1,320"

The Purchase of Inventories should be recorded at the rate prevailing as on the date of Purchase. Therefore, the Providence Systems should debit the Inventory purchased for $1,320. The Following Journal Entry shall be passed to record the purchase of Inventory on account

Journal Entry in the books of Providence Systems

Accounts Tittles and Explanations

Debit ($)

Credit ($)

Merchandise Inventory A/c

1,320

To Accounts Payable A/c – Megaplex

1,320

[ Entry to record the purchase of Merchandise Inventory on accounts,

YEN 50,000 x $0.0088 = $1,320 ]

Accounts Tittles and Explanations

Debit ($)

Credit ($)

Merchandise Inventory A/c

1,320

To Accounts Payable A/c – Megaplex

1,320

[ Entry to record the purchase of Merchandise Inventory on accounts,

YEN 50,000 x $0.0088 = $1,320 ]

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