question archive ABC Ltd is an Australian company for which the Australian dollar (A$) is the functional currency The company has entered into a foreign currency transaction during the year ended 30 June 2018, selling goods on credit to a British company, London Sale Ltd, on 13 June 2018 • The contract, denominated in pounds amounts to £135 000
ABC Ltd is an Australian company for which the Australian dollar (A$) is the functional currency The company has entered into a foreign currency transaction during the year ended 30 June 2018, selling goods on credit to a British company, London Sale Ltd, on 13 June 2018 • The contract, denominated in pounds amounts to £135 000
Subject:BusinessPrice: Bought3
ABC Ltd is an Australian company for which the Australian dollar (A$) is the functional currency The company has entered into a foreign currency transaction during the year ended 30 June 2018, selling goods on credit to a British company, London Sale Ltd, on 13 June 2018 • The contract, denominated in pounds amounts to £135 000. London Sales Ltd pay for the goods on 7 July 2018 • Relevant exchange rates are as follows: (Judging: direct or indirect quote?) 13 June 2018: A$1.00= £0.5688 30 June 2018: A$1.00= £0.5470 7 July 2018: A$1.00= £0.5891 Required: 1) Prepare the journal entries to record the foreign currency transactions entered into by ABC Ltd with London Sales Ltd. 2) What do you think ABC Ltd can do to avoid risks in the face of uncertain exchange rate trends? 3) How do you understand the gains or losses reflected in accounting records
