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Anonymous
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Asked: 2022-01-25T21:18:58+02:00 In:

Prepare journal entries to record all matters relating to the acquisition and payment of the inventory assuming that: (i) Payment for the inventory was made on 31 December 2015 (6 marks) (ii) Payment for the inventory was made on 1 March 2016 ( 8 marks) (b) Discuss the differences between transaction risk , translation risk and economic risk ( 6 marks ) (c) Explain how inflation rates can be used to forecast exchange rates (5 marks)

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a) On September 2014 Sugar limited whose financial currency is the Namibian dollar —placed an order for inventory with an American supplier for USD 50 000. The risk and rewards associated with the inventory passed to Sugar limited on 1St December 2015. Sugar Limited’s year-end is 31 December. Exchange rates 1 September 2015 USD 1 = N$ 8.10 1 December 2015 USD 1 = N$ 8. 35 31 December 2015 USD 1 = N$ 8.45 1 March 2016 USD 1 = N$ 8.65 Required: Prepare journal entries to record all matters relating to the acquisition and payment of the inventory assuming that: (i) Payment for the inventory was made on 31 December 2015 (6 marks) (ii) Payment for the inventory was made on 1 March 2016 ( 8 marks) (b) Discuss the differences between transaction risk , translation risk and economic risk ( 6 marks ) (c) Explain how inflation rates can be used to forecast exchange rates (5 marks)

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