Coyote Corp. (a U.S. company in Texas) had the following series of transactions

Question

Coyote Corp. (a U.S. company in Texas) had the following series of transactions in a foreign country during 2013:



The appropriate exchange rates during 2013 were as follows:



Prepare all journal entries in U.S. dollars along with any December 31, 2013 adjusting entries. Coyote uses a perpetual inventory system.

Mar. 1 Bought inventory costing 60,000 pesos on credit. May 1 | Sold 60% of the inventory for 54,000 pesos on credit Aug. 1 Collected 48,000 pesos from customers Sept1 Paid 36,000 pesos to creditors

Explanation / Answer

1 Journal Entries of Coyote Corp. Date Account Titles and Explanation Debit Credit In ($) 2013 March, 1 Inventory a/c            12,000 To Accounts Payable a/c             12,000 (Bought Inventory on credit ) (60,000 pesos * $.20 = $12,000) May, 1 Accounts Receivable a/c              7,128 To Inventory a/c               7,128 (Sold Inventory for credit ) [(54,000 pesos * $.22)*60%] = $7,128) August, 1 Cash a/c            11,040 To Accounts Receivable a/c             11,040 (Cash collected from customers ) (48,000 pesos * $.23 = $11,040) September, 1 Accounts Payable a/c              8,640 To Cash a/c               8,640 (Cash paid to creditors ) (36,000 pesos * $.24 = $8,640)

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