Prepare journal entries to record farmer transactions

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Question - The Farmer Corporation engaged in the following transactions during 2014. Farmer uses a perpetual inventory system:

Mar. 31 Purchased merchandise from a Dutch supplier at a cost of 100,000 Euros. The exchange rate on this date was $1.30 per Euro.

Apr . 19 Paid for the merchandise. The exchange rate on this date was $1.32 per Euro.

May 11 Sold goods to a U.S. buyer at a selling price of $70,000 U.S. dollars. The exchange rate on this date was $1.02 Canadian dollars for each U.S. dollar. Ignore the journal entry to record cost of goods sold.

Jun. 15 Received payment from the U.S. buyer for the goods sold on June 10. The exchange rate on this date was $1.03 Canadian dollars for each U.S. dollar.

a) Prepare the journal entries necessary to record each of the above transactions.

b) During the periods of time covered by the transactions, was the Canadian dollar getting stronger or weaker relative to the Euro and the U.S. dollar?

Reference no: EM132231830

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