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On January 1, ABC Corporation, a U.S. based manufacturer, buys 10 million yen worth of inventory from SA Corporation, a Japanese-based firm.The purchase is made on credit and the balance is to be paid in 3 months. The U.S. dollar/Japanese yen exchange rate was $1.00 = 125 yen on January 1, and $1.00 = 120 yen on April 1.
Prepare dated journal entries for ABC Corporation in U.S. dollars for the incurrence and settlement of this foreign currency transaction.ABC Corporation employs a two-transaction perspective.
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