Problem - Bartlett Company, headquartered in Cincinnati, Ohio, has occasional transactions with companies in a foreign country whose currency is the lira.
Transactions in 2015
February 1 Bought equipment for 61,000 lira on credit. April 1 Paid for the equipment purchased February 1. June 1 Bought inventory for 93,000 lira on credit. August 1 Sold 80 percent of inventory purchased June 1 for 61,000 lira on credit. October 1 Collected 48,800 lira from the sales made on August 1, 2015. November 1 Paid 62,000 lira on the debts incurred on June 1, 2015.
Transactions in 2016
February 1 Collected remaining 12,200 lira from August 1, 2015, sales. March 1 Paid remaining 31,000 lira on the debts incurred on June 1, 2015.
Currency exchange rates for 1 lira for 2015
February 1 $ 0.55 April 1 0.56 June 1 0.58 August 1 0.59 October 1 0.60 November 1 0.61 December 31 0.63
Currency exchange rates for 1 lira for 2016
February 1 $ 0.65 March 1 0.66
Prepare journal entries for the following transactions in U.S. dollars. Also prepare any necessary adjusting entries at December 31 caused by fluctuations in the value of the lira. Assume that the company uses a perpetual inventory system.