Help accounting problem.please.please! ;(

Question

help, i tried solving it but my teacher said it's wrong, i cant think how else am i gonna figure it out. help please.

Echanis Printworks bought a printing machine at a cost price of $30,000 from Lenard Company U.S.A. A downpayment of $10,000 was required, a bank draft of which was prepared against the dollar account of the company. The balance was payable after 60 days. The exchange rate to philippine peso on this date was P40 on the date of purchase but it went down to P45 to a dollar60 days after. Additional expenditures paid in cash were import duties P75,000, freight and insurance of P25,000 and installation and test of machine P5,000.

COMPUTE FOR THE PURCHASE PRICE OF THE MACHINE? help anyone :(

Answer 1

1. What is the currency used by the company. I'm assuming that it's in PESOS.

2. When is the delivery date & installation of the asset. I'm assuming that it's 60 days after.

Using those 2 assumptions, since this transaction happened within a time frame longer than a month & involve a down payment process & different currencies, I would thing the proper way of capitalizing the asset is like below:

1. On Day 1, a downpayment of $10,000 equiv to P400,000 was made. As the assets is not yet arrived then the debit should goes to your assets in transits. Entries should be made in USD & converted at P40.

2. On Day 61, the asset arrived, paid, installed & ready to use. Remaining payments made is $20,000 or P900,000 plus additional expenses of P105,000.

Total cost then P400,000 + P900,000 + P105,000 = P1,350,000

Answer 2

1. If yu yuze the dollar akkount tu pae all the bills, The 60-daes later paesos shood yuze the exchanj rate wen yu konverted from dollars...45.

2. maby teech want all the numbers in paesos...505,000

Answer 3

Purchase price of machine = $30,000 + P75,000 + P25,000 + P5,000, translated at P40. The cost stays at that amount thereafter. 60 days later, take the exchange difference arising from the payable to income statement. You never adjust fixed assets for exchange rates.