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:
December 15, 2007
December 31, 2007
January 30, 2008
Provide the necessary journal entries for CarCo to record the above transactions assuming CarCo’s fiscal year-end is December 31.