On September 1, 2008, Ramus Company purchased machine parts from Ho Man Tin Company for 6,000,000...
Question:
On September 1, 2008, Ramus Company purchased machine parts from Ho Man Tin Company for 6,000,000 Hong Kong dollars to be paid on January 1, 2009. The exchange rate on September 1 is HK$7.7 = $1. On the same date, Ramus enters into a forward contract and agrees to purchase HK$6,000,000 on January 1, 2009, at the rate of HK$7.7 = $1.
Make all journal entries necessary on Ramus' books on three dates September 1, 2008, December 31, 2008, and January 1, 2009, to record this purchase and the forward contract. On December 31, 2008, and on January 1, 2009, the exchange rate is HK$8.0 = $1. Ramus uses a perpetual inventory system.
Perpetual Inventory System:
In the perpetual inventory valuation technique, the technology is used to update the inventory record after every sale in the purchase transaction. This method is more useful than the periodic inventory technic.
Answer and Explanation: 1
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View this answerOn Sep. 1, 2013:
{eq}Inventory \ = \ \dfrac{6,000,000}{7.7} \\ Inventory \ = \ \$779,221 {/eq}
| Date | Particulars | Debit | Credit |
|---|---|---|---|
| Sep. 1, 2013 | Inventor... |
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Perpetual Inventory System: Definition, Advantages & Examples
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Chapter 1 / Lesson 15
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Perpetual inventory systems are used by businesses to monitor their inventories in real-time with the use of radio frequency identification, barcodes, point of sales, and other technological systems. Learn about the definition of a perpetual inventory system, the advantages of using this system, and some examples of perpetual inventory systems.
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