SIT Internal
I
The following is an extract of the foreign currency transactions of Co X.
The functional currency of Co X is the Singapore dollar.
Date
Transactions
Amt (USD)
1 Jan 20x5
Beginning USD bank balance
600,000
Beginning USD receivables
300,000
Beginning USD payables
250,000
Jan-Dec 20x5
Sales to foreign customers
2,000,000
Jan-Dec 20x5
Purchases of inventory
1,200,000
Jan-Dec 20x5
Collections from customers
1,800,000
Jan-Dec 20x5
Payments to payables
1,250,000
1 July 20x5
Prepaid insurance for 12 months
20,000
1 July 20x5
Purchased equipment in USD on credit
4,000,000
31/12/20x5
(year-end)
31/12/20x5
30/01/20x6
Depreciation of equipment
(assuming useful life of 5 years)
Ending inventory arose from purchases
made on 2/11/20x5
Ending USD receivables
Ending USD payables
USD bank balance as at 31/12/20x5
Settlement to equipment vendor
100,000
500,000
200,000
1,130,000
4,000,000
Assume that sales, purchases and cash settlements are evenly spread throughout 20x5.
For simplicity, assume exchange gain or loss on USD bank account, receivables and payables was
consolidated and recognized at the end of the year rather than after each cash transaction.
Exchange rates
1 Jan 20x5
Average rate for 20x5
1 July 20x5
2 November 20x5
31 Dec 20x5
30 Jan 20x6
SGD to USD1
1.78
1.68
1.63
1.64
1.6
1.65
Required:
(1) Prepare the journal entries for Company X to record the above
transactions in the books of Company X as a stand-alone entity.
1