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 transactions in U.S. dollars. Also prepare any necessary adjusting entries at December 31 caused by fluctuations in the value of the lira. Assume that the company uses a perpetual inventory system.
Transactions in 2011
February 1 Bought equipment for 40,000 lira on credit.
April 1 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, 2011.
November 1 Paid 20,000 lira on the debts incurred on June 1, 2011.

Transactions in 2012
February 1 Collected remaining 10,000 lira from August 1, 2011, sales.
March 1 Paid remaining 10,000 lira on the debts incurred on June 1, 2011.

Currency exchange rates for 1 lira for 2011
February 1 $0.44
April 1 0.45
June 1 0.47
August 1 0.48
October 1 0.49
November 1 0.50
December 31 0.52

Currency exchange rates for 1 lira for 2012
February 1 $0.54
March 1 0.55