Chapter 15 accounting

"Problem 15-2 "Europa west "a "General Journal "13-Nov "Inventory "1405000 "Accounts Payable "1405000 "Purchase of automobiles from Stockholm Motors for SK20 ,000 ,000 when "exchange rate is .07025 per krona "SK20 ,000 ,000 CH .07025 1 ,405 ,000 "01-Jan "Loss on fluctutations in foreign exchange rates "24400 "Accounts Payable (Stockholm Motors "24400 "Adjusting balance of SK20 ,000 ,000 account payable to year end exchange rate "Original amount "1405000 "Adjustment 20 ,000 ,000 CH .07147 "1429400 "Required "-24400 "12-Jan "Accounts Payable (Stockholm Motors "1429400 "Cash "1421400 "Gain due to exchange rate fluctutaion "8000 "To record payment of 20 ,000 ,000 kronas

account to Stockholm Motors and "recognize gain from lower exchange rates on Dec . 31 "Adjusted amount payable Dec 31 "1429400 "Payment on Jan . 11 "1421400 "Gain from decline in exchange rate "8000 "b "Exchange rate on Jan 11 "Amount paid "1421400 0 .7107 / krona "Liability in SK "c "Europa-West should have purchased 60-day future contracts worth 20 million kronor on Nov 12 . This would lead to generation of receiveable in "kronas of the same value as that of the companies ' payables . This would have secured the company against exchange rate fluctuations as "it would have countered any loss or gain by an equvalent amount on the future contracts "Problem 15-6 "Wolfe Computer "a "Genral Journal "29-Oct "Inventory of Raw materials "1890000 "Accounts Payable (Mitsutonka "1890000 "Purchase of 20 ,000 hard drives from Mitsutonka for ?180 ,000 ,000 due in 30 days "Exchange rate 0 .0105 ?180 ,000 ,000 CH...