On July 1, 2015 the Skywalker Company (American) buys a 3 year 100,000 C$ 10% CD
ID: 2453688 • Letter: O
Question
On July 1, 2015 the Skywalker Company (American) buys a 3 year 100,000 C$ 10% CD from C3PO bank (Canadian) when $1 =1 C$. This CD pays interest annually on July 1. The exchange rates for the Canadian and US dollars are as follows:
July 1, 2015 $1 = 1C$ (C$ is Canadian dollar)
December 31, 2015 $1 = .90 C$
July 1, 2016 $1 = 1 C$
December 31, 2016 $1 = 1.05 C$
July 1, 2017 $1 = 1.10 C$
December 31, 2017 $1 = .98 C$
July 1, 2018 $1 = .88 C$
REQUIRED: MAKE ALL THE NECESSARY JOURNAL ENTRIES FOR SKYWALKER CONNECTED WITH THIS CD…DON’T FORGET ADJUSTING ENTRIES ON DECEMBER 31!!!
Explanation / Answer
December 31 2015
Interest Accrued on CD 5,000
To Interest Revenue 5,000
(Being interest duie on C$ CD)
Investment in C $ 10,000
To exchange rate gain 10,000
(Being exchange gain accounted)
July 1 2016
Cash 10,000
To Interest Accrued 5,000
To Interest revenue 5,000
(Being interest Received)
December 31 2016
Interest Accrued on CD 5,000
To Interest Revenue 5,000
(Being interest duie on C$ CD)
Exchange rate loss 15,000
To investment in CD 15,000
(Being exchange loss accounted)
July 1 2017
Cash 10,000
To Interest Accrued 5,000
To Interest revenue 5,000
(Being interest Received)
December 31 2017
Interest Accrued on CD 5,000
To Interest Revenue 5,000
(Being interest duie on C$ CD)
Investment in CD 7,000
To exchange rate gain 7,000
(Being exchange loss accounted)
July 1 2018
Cash 10,000
To Interest Accrued 5,000
To Interest revenue 5,000
(Being interest Received)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.