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									Question 1:

BONGANI (PTY) LTD is engaged in importing and exporting commodities. The following
trasacations were extracted from the records for the financial period ended
31 December 2008.

Transaction 1:
The company imported raw materials from a European supplier in terms of a FOB shipping
contract with a value of $ 145 000. The supplier will be settled in two equal instalments on
22 December 2008 and 22 January 2009. The goods were placed aboard ship in Spain on
15 October 2008 and landed in Cape Town on 5 November 2008.

Trasnaction 2:
On 4 December 2008, the company exported goods to a customer in the United States with
a value of $ 210 000 in terms of a CIF agreement. Settlement will take place on 28 February
2009.

The exchange rates were as follows:
                    US$ 1: R
15-Oct-08               9.20
 5-Nov-08               9.75
 4-Dec-08               9.50
22-Dec-08             10.02
31-Dec-08               9.90
 22-Jan-09              9.54
28-Feb-09             10.12

Required:

Record the journal entries for the above transactions for the years ended 31 December 2008
and 31 December 2009.
                                                                  [25 marks]
Solution:

The exchange rates were as follows:
                US$ 1: R         Creditor      Gain/(Loss)         Debtor         Gain/(Loss)
15-Oct-08            9.20        1,334,000.00
 5-Nov-08            9.75
 4-Dec-08            9.50                                          1,995,000.00
22-Dec-08           10.02        1,452,900.00     118,900.00
31-Dec-08            9.90           717,750.00     (8,700.00)      2,079,000.00    84,000.00
 22-Jan-09           9.54           691,650.00    (26,100.00)
28-Feb-09           10.12                                          2,125,200.00    46,200.00

JOURNAL
 15-Oct-08 DR: Inventory                           1,334,000.00
           CR: Foreign creditor                                  1,334,000.00
           [Recognising the goods imported i.t.o FOB shipping contract]                   [3]

 4-Dec-08 DR: Foreign debtor                      1,995,000.00
          CR: Revenue                                          1,995,000.00
          [Recognising the goods exported i.t.o CIF contract]                             [2]

22-Dec-08 DR: Exchange Loss [P & l]                  118,900.00
          CR: Foreign creditor                                       118,900.00
          [Fair valuing foreign creditor at payment date]                                 [3]

22-Dec-08 DR: Foreign creditor                       726,450.00
          CR: Bank                                                   726,450.00
          [Payment of foreign creditor]                                                   [2]

31-Dec-08 DR: Foreign creditor                          8,700.00
          CR: Exchange gain [P & L]                                    8,700.00
          [Fair valuing foreign creditor at period ended]                                 [3]

31-Dec-08 DR: Foreign Debtor                          84,000.00
          CR: Exchange gain [P & L]                                   84,000.00
          [Fair valuing foreign debtor at period ended]                                   [2]

22-Jan-09 DR: Exchange Loss [P & l]                    26,100.00
          CR: Foreign creditor                                        26,100.00
          [Fair valuing foreign creditor at payment date]                                 [2]

22-Jan-09 DR: Foreign creditor                       691,650.00
          CR: Bank                                                   691,650.00
          [Payment of foreign creditor]                                                   [2]
28-Feb-09 DR: Foreign Debtor                           46,200.00
          CR: Exchange gain [P & L]                                46,200.00
          [Fair valuing foreign debtor at settlement date]                     [2]

28-Feb-09 DR: Bank                                 2,125,200.00
          CR: Foreign Debtor                                    2,125,200.00
          [Settlement of account by foreign debtor]                            [2]

                                     Creditor        Debtor
15-Oct-08  Inventory               1,334,000.00
 4-Dec-08  Revenue                                 1,995,000.00
22-Dec-08  Exchange loss             118,900.00
22-Dec-08  Bank                     (726,450.00)
           Balance                   726,450.00
31-Dec-08 Exchange gain/loss          (8,700.00)     84,000.00
           Balance                   717,750.00 2,079,000.00
 22-Jan-09 Exchange gain             (26,100.00)
           Bank                     (691,650.00)
           Balance                          -
28-Feb-09 Exchange gain                              46,200.00
           Bank                                  (2,125,200.00)
                                                           -

								
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