‘Foreign Currency Transactions and Hedging Foreign Exchange Risk 429 28. Bartlett Company, headquartered in Cincinnati, Ohio. has occasional transactions with companies in a foreign country whose currency is the lira. Prepare journal entries for the following trans- actions in U.S. dollars Also prepare any necessary adjusting entries at December 31 caused by Auctuations in the value of the lira. Assume that the companiy uses a perpetual inventory system. ‘Transactions in 2015 February 1 Bought equipment for 40,000 fra on credit. April t Paid for the equipment purchased February 1. June 1 Bought inventory for 30,000 lira on credit. ‘August 1 Sold 70 percent of inventory purchased June 1 for 40,000 lira on credit, October 1 Collected 30,000 lira from the sales made on August 1, 2015. November 1 Paid 20,000 lira on the debts incurred on June 1, 2015. Transactions in 2016 February 1 Collected remaining 10,000 lira from August 1, 2015, sales. March 1 Paid remaining 10,000 lira on the debts incurred on June 1, 2015. Currency exchange rates for 1 lira for 2015, February 1 $0.44 Apail 1 0.45 dune 1 0.47 August 1 0.48 October 1 0.43 November 1 0.50 December 310.52 Currency exchange rates for 1 lira for 2016 February 1 so.sa March 1 Oss AeCoumes Payabte Ck) £40,000 x $44) s17.600 Persian ‘Gzchanae Lose ‘Se3 "“Eaun ta5.000 = 851 10.000 ei008 inwentory $14,100 RecStinte Payette (kL) 190.000 x $473 14.100 S109 Accounts Recelvabie (L) [40.000 = $481 319.200 ‘Saice" s10,200 inventory fe4s 400 x 705) " 50.870 ser109 Caan (30,000 = $403 514,700 ReSctinte Figcanvatie (1) (249,200 = a4) 14.400 Porcign Exchange Om 308. 11709 Accounts Payanle {Lp {$414,100 x 231, $9,400 Porsign Exchange Lads [saeco (50 sam "soo Sach (ao.o0e = s8o $10,000 1273109 Fargign Exchange Lowe ‘ss00 Recounts Pavan () (10,000 « (8.52 — 5.47 500 Accounts recamante (L) [10,000 «($52 S48) $400 Foreign exchange Gain 400, 2nne Cash (0.000 x 3.38 $5.00 “Recounts Recervatie (Ly (10.000 * 5.521 so.z00 Foreign exchange Gain 3eo saw Accounts Payable (4) [10,000 x $.921 35.200