Question

Esson Oil buys oil at market prices and sells it at market price plus a profit margin of U.S. $5 per barrel. On January 1, Esson buys 10 barrels of oil at a price of U.S. $30 per barrel when the Canadian dollar is on par with the U.S. dollar. On January 2, Esson sells 2 barrels for U.S. $35 each (the market price is still U.S. $30). On January 3, the price of oil increases to U.S. $32 per barrel. On January 4, Esson sells 5 more barrels at U.S. $37. No cash was either received or paid. The following exchange rates exist:
January 1 C$1 = U.S. ...... $1.00
January 2 C$1 = U.S. ...... $0.90
January 3 C$1 = U.S. ...... $0.92
January 4 C$1 = U.S. ...... $0.88
Required
Prepare the journal entries to reflect these transactions assuming the functional currency is the Canadian dollar and Esson uses a perpetual inventory system.


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  • CreatedJune 09, 2015
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