In this ex., on the year end date will the co., in it’s B/S record A/P = 5,950 or 6,050 & also the inventory at 5,950 or 6,050?
On the settlement date will the co., make a payment of 6,250? And pass a journal entry as,
A/P 5,950
Exch Loss 300
To Cash 6.250
And in the B/S the reduction of A/P would be of 5,950 or 6,250?
I know it’s not required for our exam but still I wanted to know how actually the transaction entries are noted. I would be overwhelmed if someone does helps me out with this. Thank you!
On 15th Oct Accounts payable and inventory will be recorded at 0.6050. Later on, at the end of the year, account payable will be valued at 0.5950. Inventory will not be valued at 0.5950. Gain on accounts payable 0.6050-0.5950 = 0.010. On payment date accounts payable will be valued at 0.6250 and accordingly loss will be booked.
Ok. Thank you Udit!