1
ACC 405
Module 4 Project
Practice Problems and Solutions
Southern New Hampshire University
,2
, 3
ACC-405
Module 4 Practice Problems and Solutions
Problem 1. Selco, a U.S. Company, imports and exports tools, shop equipment, and industrial
construction supplies. The company uses a periodic inventory system. During April the company entered
into the following transactions. All rate quotations are direct exchange rates.
April 3 - Purchased power tools from a wholesaler in Japan, on account, at an invoice cost of 1,600,000
yen. On this date the exchange rate for the yen was $.0072.
April 5 - Sold hand tools on credit that were manufactured in the U.S. to a retail outlet located in West
Germany. The invoice price was $2,800. The exchange rate for euros was $0.0322.
April 9 - Sold electric drills on account to a retailer in New Zealand. The invoice price was 16,800 U.S.
dollars and the exchange rate for the New Zealand dollar was $.76.
April 11 - Purchased drill bits on account from a manufacturer located in Belgium. The billing was for
801,282 euros. The exchange rate for euro was $.0312.
April 16 - Paid 1,000,000 yen on account to the wholesaler for purchases made on April 3. The exchange
rate on this date was $.0067.
April 18 - Settled the accounts payable with the Belgium manufacturer. The exchange rate was $.0368.
April 22 - Received full payment from the New Zealand retailer. The exchange rate was $.74.
April 30 - Completed payment on the April 3 purchase. The exchange rate for yen was $.0078.
Required:
Prepare journal entries on the books of Selco to record the transactions listed above.
Answer
Apr. 3 Purchases 11,520
Accounts Payable (1,600,000 x $.0072) 11,520
5 Accounts Receivable 2,800
Sales 2,800
9 Accounts Receivable 16,800
Sales 16,800
11 Purchases 25,000
Accounts Payable (801,282 x $.0312) 25,000
16 Accounts Payable (1,000,000 x $.0072) 7,200
Transaction Gain 500
Cash (1,000,000 x $.0067) 6,700
18 Accounts Payable 25,000
Transaction Loss 4,487
Cash (801,282 x $.0368) 29,487
22 Cash 16,800
ACC 405
Module 4 Project
Practice Problems and Solutions
Southern New Hampshire University
,2
, 3
ACC-405
Module 4 Practice Problems and Solutions
Problem 1. Selco, a U.S. Company, imports and exports tools, shop equipment, and industrial
construction supplies. The company uses a periodic inventory system. During April the company entered
into the following transactions. All rate quotations are direct exchange rates.
April 3 - Purchased power tools from a wholesaler in Japan, on account, at an invoice cost of 1,600,000
yen. On this date the exchange rate for the yen was $.0072.
April 5 - Sold hand tools on credit that were manufactured in the U.S. to a retail outlet located in West
Germany. The invoice price was $2,800. The exchange rate for euros was $0.0322.
April 9 - Sold electric drills on account to a retailer in New Zealand. The invoice price was 16,800 U.S.
dollars and the exchange rate for the New Zealand dollar was $.76.
April 11 - Purchased drill bits on account from a manufacturer located in Belgium. The billing was for
801,282 euros. The exchange rate for euro was $.0312.
April 16 - Paid 1,000,000 yen on account to the wholesaler for purchases made on April 3. The exchange
rate on this date was $.0067.
April 18 - Settled the accounts payable with the Belgium manufacturer. The exchange rate was $.0368.
April 22 - Received full payment from the New Zealand retailer. The exchange rate was $.74.
April 30 - Completed payment on the April 3 purchase. The exchange rate for yen was $.0078.
Required:
Prepare journal entries on the books of Selco to record the transactions listed above.
Answer
Apr. 3 Purchases 11,520
Accounts Payable (1,600,000 x $.0072) 11,520
5 Accounts Receivable 2,800
Sales 2,800
9 Accounts Receivable 16,800
Sales 16,800
11 Purchases 25,000
Accounts Payable (801,282 x $.0312) 25,000
16 Accounts Payable (1,000,000 x $.0072) 7,200
Transaction Gain 500
Cash (1,000,000 x $.0067) 6,700
18 Accounts Payable 25,000
Transaction Loss 4,487
Cash (801,282 x $.0368) 29,487
22 Cash 16,800
