Saudi Electronic University Accounting Journal Entries Questions
Description
1.On October 1, 2021, a manufacturing company in Egypt imported raw materials of 100,000 $ from the United States by letter of credit and it will pay for the raw materials after 6 months against promissory note.
Exchange rates of Egyptian pound against us $ were as follows:
October 1, 202115.70
December 31, 202115, 60
March 31, 202218.5
Required:
a. Pass journal entries to record purchasing raw materials.
b. Pass journal entries to record the impact of change in exchange rates at the end of the year.
c. journal entries to record payment ofliabilities on March 31, 2022.
Answer:
2. On January 1, 2021 a parent company based in US acquired a subsidiary in Egypt and the following information is extracted from the subsidiary’ books for 2021 :
Inventory purchased on Oct. 1 2021.
Purchases of inventory have been made throughout the year.
Uses straight-line depreciation on fixed assets.
Dividends declared and paid on December 1, 2021
Fixed assets have been purchased on Feb. 1 2021.
Adjusted trail balance as of 31/12/2021 as follows:
Account title
Amount in Egyptian pound
Cash
2,000,000
Accounts receivable
2,000,000
Inventory
5,000,000
Notes receivable
1,000,000
Plant assets
10,000,000
dividends
200,000
Cost of goods sold
7,000,000
Depreciation expense
200,000
Other expenses
500,000
Total debits
25,900,000
Sales
10,000,000
Accumulated depreciation
200,000
Accounts payable
3,000,000
Notes payable
1,000,000
Common stocks
9,600,000
Retained earnings
2,100,000
Total credits
25,900,000
Exchange rates:
Date
Exchange rates
January 1, 2021
15.50
Oct. 1 2021
15,60
December 1, 2021
16,50
Feb. 1 2021
17.00
December 31, 2021
17,20
Average
16.36
Required:
Prepare a schedule to translate Subsidiary’s financial statements on 31/12/2021 to U.S. dollars using current rate method.
3. The partnership of Ibrahim and Rawan have the following provisions:
– Ibrahim and Rawan receive yearly salary allowances of SAR 30,000 and SAR 20,000, respectively.
-Interest is rate of 6 % on the average capital investment.
-Any remaining profit or loss is shared between Ibrahim and Rawan at a ratio of 2:1 ratio, respectively.
-Average Capital investments:Ibrahim SAR 100,000; Rawan, 50,000
Required:
Prepare a schedule showing the distribution of the profit between the two partners assuming the partnership profit SAR 200,000.
Pass journal entries to allocate the profit to the partners.
Answer:
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