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Cash Flow Questions
Cash Flow Questions
Pretty Ltd is a manufacturing company based in RSA. On 30 June 2006 Pretty Ltd sold
inventory to the value of $100 000 to American company (ABC Ltd). Payment was
received on 30 August 2006. No forward exchange contract was taken out.
Question 2
On 15 August 20x7 Export Ltd sold computers to the value of R30 000 to American
Exporters Inc. No forward exchange contract was taken out. The transaction was
invoiced in dollars at the spot rate ruling on transaction date.
REQUIRED
General journal entries (without narrations) assuming that payment by American
Exporters Inc. took place on the following dates:
20 November 20x7
31 December 20x8
Question 3
Maine Ltd is a South African company, manufacturing computers and markets the
product abroad. During the month of June 2013 the following transactions took place:
An American company placed an order computers to the value of $50 000 on the 1 June
2013. The order was ready for delivery on the 5 th June 2013. Goods were shipped free
on board (FOB) on the 7th June 2013 (transaction date), thereafter arrived and offloaded
on the American harbour on the 8th June 2013. No forward exchange contract was taken
out. The payment took place on the 31 July 2014. The financial year end of Maine Ltd is
30 June.
Required:
Prepare all the relevant journal entries in the books of Maine Ltd, a South African
company, for the financial years 2013 and 2014.
Question 4
XYZ (Pty) Ltd is a manufacturing company based in RSA. XYZ (Pty) Ltd received an
order of $50 000 from an American company, to ship goods free on board to America on
30 June 2006. Payment of $25 000 was made on 30 August 2006 and the balance was
paid on 31 January 2007.
XYZ (Pty) Ltd ordered raw materials from United Kingdom for an amount of £10 000.
Payment for the raw material was made on 31 May 2006. The raw material was shipped
free on board on 1 April 2006. The year end of the company is 31 December. 20% of the
raw material bought was still on hand at year end and was used during January 2007.
Required:
Prepare the relevant journal entries in the books of XYZ (Pty) Ltd for the year
ended 31 December 2006.