Fabulous Berhad buys teas in bulk from Malaysian and Thai farmers. It then blends and repacks...

 

 

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Fabulous Berhad buys teas in bulk from Malaysian and Thai farmers. It then blends and repacks the tea leaves into smaller quantities for sale to retailers in local and oversea markets under the brand name "SAET". Fabulous Berhad, whose functional currency is the Malaysia Ringgit. undertook the transactions below on the following dates: Transaction 1 2 3 4 Date 20 August 2020 4 October 2020 13 October 2020 10 November 2020 The company sold goods on credit to a customer in Perth, Australia for an invoice amount of AUD102,000. An equipment costing USD25.500 was purchased from a supplier in New Jersey in the United States of America. The company obtained a British Pound long-term loan of £255,000 from a banker in London, United Kingdom. The company partly paid the amount of USD15,300 to the supplier in New Jersey for the invoice dated 4 October 2020. Given below were the exchange rates for RM per unit of foreign currency: Sell 3.4300 4.8300 5.8000 4.2504 3.4986 4.2504 5.9160 Date 20 July 2020 4 October 2020 13 October 2020 10 November 2020 31 December 2020 Foreign currency AUD USD £ USD AUD USD £ Required: (a) Prepare the workings and journal entries to: (1) Record each of the foreign currency transactions. Buy 3.0870 4.3470 5.2200 3.8254 3.1487 3.8254 5.3244 (6 marks) (ii) Recognize and calculate the resulting exchange difference arising on the retranslation upon settlement. (4 marks) (iii) Compute the resulting exchange differences at the closing of the financial year. (9 marks) Note: The narrations or reasons for the journal entries must be provided. (b) Discuss any THREE (3) differences between using a foreign sales agent to sell a company's products, compare to establishing a business permanent presence in a foreign country. (6 marks) Fabulous Berhad buys teas in bulk from Malaysian and Thai farmers. It then blends and repacks the tea leaves into smaller quantities for sale to retailers in local and oversea markets under the brand name "SAET". Fabulous Berhad, whose functional currency is the Malaysia Ringgit. undertook the transactions below on the following dates: Transaction 1 2 3 4 Date 20 August 2020 4 October 2020 13 October 2020 10 November 2020 The company sold goods on credit to a customer in Perth, Australia for an invoice amount of AUD102,000. An equipment costing USD25.500 was purchased from a supplier in New Jersey in the United States of America. The company obtained a British Pound long-term loan of £255,000 from a banker in London, United Kingdom. The company partly paid the amount of USD15,300 to the supplier in New Jersey for the invoice dated 4 October 2020. Given below were the exchange rates for RM per unit of foreign currency: Sell 3.4300 4.8300 5.8000 4.2504 3.4986 4.2504 5.9160 Date 20 July 2020 4 October 2020 13 October 2020 10 November 2020 31 December 2020 Foreign currency AUD USD £ USD AUD USD £ Required: (a) Prepare the workings and journal entries to: (1) Record each of the foreign currency transactions. Buy 3.0870 4.3470 5.2200 3.8254 3.1487 3.8254 5.3244 (6 marks) (ii) Recognize and calculate the resulting exchange difference arising on the retranslation upon settlement. (4 marks) (iii) Compute the resulting exchange differences at the closing of the financial year. (9 marks) Note: The narrations or reasons for the journal entries must be provided. (b) Discuss any THREE (3) differences between using a foreign sales agent to sell a company's products, compare to establishing a business permanent presence in a foreign country. (6 marks)

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Certainly lets address each part of your question a Prepare the workings and journal entries i Record each of the foreign currency transactions 1 Augu... View the full answer