Foreign Currency Purchase Koreaco produces automobile transmissions, which are then sent to the…

Foreign Currency Purchase

Koreaco produces automobile transmissions, which are then sent to the United States where they are installed in domestically built cars. CarCo,a U.S. auto company, received a shipment of transmissions on December 15, 2007. The transmissions were subsequently paid for on January 30, 2008. The invoice was denominated in Korean won and totaled 5,000,000 won. The number of Korean won required to purchase 1 U.S. dollar fluctuated as follows:

 

Exchange Rates

December 15, 2007                                                   

800

December 31, 2007                                                   

780

January 30, 2008                                                      

720

Provide the necessary journal entries for CarCo to record the above transactions assuming CarCo’s fiscal year-end is December 31.

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