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Materials imported(Purchase) from X,Company on60 days credit ,Value of Euro.5,0/- Exchange rate is Aed.5.5 per1 Euro.Then settlement made after60 days for the Same Amount but exchange rate was AED5.65/1 Euro..what should be the journal at the time of purchase and settlement?
1. At the Time of Purchase
Dr. Purchase 275 AED
Cr. X.Co LTD 275 AED
(Being Purchased from X Co. Worth50 Euro and the Currency Exchange rate is AED5.5/1 Euro)
2. At The Time of Payment(Currency Exchange Rate is Changed)
Dr. X Co. Ltd 275 AED
Dr. Gain/ Loss on Currnecy Exchange 7.50 AED
Cr. Bank 282.50 AED
( Being Payment made to M/s X Co. LTD of50 Euro , the Currency Exchange is AED5.65/1 Euro)
1.Purchase entry
dr. Purchase a/c27.5 aed
cr. sundry creditors (i.e. x co.) 27.5 aed.
2. dr. sundry creditors a/c.(i.e. X co.) =27.5 aed
dr. p/l on currency exchange rate = 0.75 aed
Cr. Bank A/c. = 28.25
Narration :- (Being loss incurred due to raise in currency exchange rate debited to creditors a/c.)
