ex 5 (final)

Forth :Accounting for export & Import transactions which adjusted at the next accounting period :

Ex 5: On1/12/2018 one of the Egyptian companies purchased goods from a French company for 500.000 frank, and the settlement on 1/3/2019.The accounting period ended at 31/12 , and the exchange rate of the French frank for the Egyptian pound was as follows: Date

Purchasing

Selling

1/12/2018

0.40

0.43

31/12/2018

0.420

0.4350

1/3/2019

0.409

0.4343

Required: . Journal entries in the importer’s records and show A/P a/c and The profit – loss of change in exchange rate a/c . Answer Exporter: French Co. Importer: Egyptian Co. Goods: 500,000 Frank Journal entries in the records of importer: 1/12 value of goods = 500,000 × 0.43 = 215,000 1/12 Purchases – foreign currency A / P – French Co.

215,000 215,000

31/12 Adjusting the value of goods at 0.4350 31/12 loss in exchange rate = ( 500,000 × 0.4350 ) – 215,000 = 2,500 P – L change in exchange rate 2,500 31/12 A / P – French Co.

2,500

1/3/2019 payment for the goods at 0.4343

Profits in exchange rate = 217,500 -217,150 = 350 1/3

A / P – French Co. Cash P – L changes in exchange rate

217,500 217,150 350 .

Dr.

A / P a/c

Cr.

cash 217,500 purchases 215,000 P-L 2500 217 ,500

Dr. P-L Change in exchange rate

Income Summary 2500 income summary 350 cash 350

217, 500

A/P

2500

Cr.

2850

2850