Question

You (US company) imported Earth Moving Equipment (EME) from Australia.

You imported EME at A$ 300 (with AP). (Australian $ 300) on Dec 1, 2018. The exchange rate was 0.8 A$/US$.

On Dec 15, you sold EME in the US at US$400 in Cash.

The exchange rate on Dec 31, 2018 was 1.5 A$/US$.

On Feb 1, 2019, you paid to your supplier in full. The exchange rate was 0.6 A$/US$.

What were NI in 2018 and 2019, respectively?

Answer 1

	Date	Exchange Rate
	Dec.1,2018	0.8A$/US$	300 Australian Dollar =	375US$	(300/0.8)
	Dec.31, 2018	1.5A$/US$	300 Australian Dollar =	200US$	(300/1.5)
	Feb. 1, 2019	0.6A$/US$	301 Australian Dollar =	500US$	(300/0.6)
			JOURNAL ENTRY
		Date	Account Title	Debit	Credit
		Dec.1,2018	Earth moving Equipment	$375
			Accounts Payable		$375
		.Dec 15,2018	Cost of goods sold	$375
			Sales Revenue		$400
		Dec.31, 2018	Accounts Payable	$175
			Foreign Currency Transaction Gain		$175
		Feb. 1, 2019	Accounts Payable	$200
			Foreign Currency Transaction Loss	$300
			Cash		$500
			NET INCOME IN 2018
			Income from Sales	$25	(400-375)
			Foreign Currency Transaction Gain	$175
			NET INCOME IN 2018	$200
			NET INCOME IN 2019
			Foreign Currency Transaction Loss	($300)