Reference no: EM132490404

Hitech Industries Inc., a Canadian company, entered into the following transactions during 2015:

Point a) On January 2, the company borrowed US $2,000,000 from an American bank with the principal amount, together with interest at 5%, repayable on January 1, 2016.

Point b) On April 1, the company purchased some machinery from an American supplier at a cost of US $400,000 with payment due on May 31. The equipment had an estimated useful life of ten years and no residual value expected at the end of that time. On December 31, 2015, the supplier's selling price for the equipment had dropped to $380,000.

Point c) On July 2, the company bought 10,000 shares of American Industries Ltd. common stock at a price of $10 U.S. per share, paying cash on that day. The investment was reported at fair value with revaluation gains and losses through profit and loss. Shares of American Industries were trading for $11.50 at the close of business on December 31, 2015.

Point d) On December 1, 2015, the company purchased some inventory from an American supplier at a cost of US $60,000 with payment due on January 31, 2016. At the end of 2015, half the inventory was still on hand. The supplier's price for the inventory items had fallen 20% during the month of December.

Selected exchange rates during 2015 were as follows:

January 2 US$1.00 = Can$1.26

April 1 US$1.00 = Can$1.28

May 31 US$1.00 = Can$1.30

July 2 US$1.00 = Can$1.32

December 1 US$1.00 = Can$1.37

December 31 US$1.00 = Can$1.38

Average for 2015 US$1.00 = Can$1.32

Question 1: Prepare all 2015 journal entries related to these transactions, including any adjusting entries required at the company's December 31, 2015, year-end.