QUESTION $4(20$ MARKS$)$

$(30$ MINUTES$)$

FBF Ltd is a South African manufacturing company that manufactures and sells specialised

tyres for sports cars across the world. FBF Ltd entered into the following transactions

denominated in American dollars during the $2022$ financial year:

On $1$ January $2022,$ FBF Ltd purchased $10$ batches of butadiene rubber and styrene rubber

for the manufacturing of the tyres from USA at a total cost of $$100000.$ On $1$ February $2022,$

FBF Ltd paid Care Insurance cash R$30500($excluding VAT$)$ to insure the goods while in

transit. The batches were shipped free on board $($FOB$)$ basis on $1$ February $2022$ and arrived

at the Durban harbour on $23$ June $2022.$ Customs duty of R$45800($excluding VAT$)$ was paid

on the date of arrival. The company uses the perpetual inventory recording system. FBF Ltd

will settle the outstanding balance on $30$ January $2023.$

FBF ordered specialised machine with a value of $$245000$ and it was shipped Cost, Insurance

Freight $($CIF$)$ on $1$ March $2022.$

Arrived at FBF$$s factory $1$ May $2022.$

Custom duty and freight charges R$165000$ on $01$ May $2022.$

Amount payable to supplier for machine by $31$ December $2022.$

A free$-$lance engineer was sent to oversee the installation of the machine on FBF$$s premises.

His fee of R$132500($incl$.15\%$ VAT$)$ was paid on $31$ May $2022.$

Machine available for use $01$ June $2022.$

Machine taken into use $1$ July $2022.$

Machine is depreciated at $10\%$ straight line method.

ADDITIONAL INFORMATION:

$1.$ No forward cover was taken out in respect of any of the above$-$mentioned transactions.

$2.$ The functional currency of FBF Ltd is South African Rand.

$3.$ The end of the current reporting period is $31$ December $2022.$

$4.$ The following exchange rates were applicable in $2022$ and $2023$:

Date

Spot rate

$$1=$R

$1$ January $202215\mathrm{.}81$

$1$ February $202215\mathrm{.}98$

$1$ March $202215\mathrm{.}05$

$1$ May $202216\mathrm{.}07$

$31$ May $202216\mathrm{.}00$

$23$ June $202216\mathrm{.}67$

$1$ July $202216\mathrm{.}45$

$1$ November $202217.05$

$31$ December $202217\mathrm{.}08$

$30$ January $202317\mathrm{.}84$

$**$ PLEASE TURN OVER FOR THE REQUIRED $**$

ACC$1$CP$2(2024)$

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Page $10$ of $10$

QUESTION $4($CONTINUED$)$

REQUIRED:

a$)$ Prepare journal entries for all the transactions entered into by FBF Ltd for the reporting

period ended $31$ December $2022.$

The journal entries are to be completed on Moodle by starting the $$Question $4$ Forex$$

test. You will be required to complete the journal entries by choosing the correct answers

from a wide selection of answers. $(20)$