Illustrative Bookkeeping Problem
Problem. At the close of the fiscal period a condensed trial balance report of the London branch of a New York concern showed as follows:
Trial Balance—London Branch
| £ | £ | |
|---|---|---|
| N. Y. Control (4.7475) | 100,000 | |
| Remittance | 50,000 | |
| Cash | 5,000 | |
| Customers | 75,000 | |
| Merchandise Inventory | 25,000 | |
| Furniture and Fixtures | 1,000 | |
| Creditors | 31,000 | |
| Sales | 150,000 | |
| Purchases | 95,000 | |
| Expenses | 30,000 | |
| 281,000 | 281,000 | |
| Final Inventory £30,000 | ||
The London Control account on the New York books showed a balance of $474,750, and the Remittance account $237,987.50. Set up, in journal form, the entries necessary to take on the New York books the results of the period’s activity at London and show the London Control and London Profit and Loss accounts after adjustment, using the additional data:
1. The Remittance account comprised 5 drafts of £10,000 each, at 4.75, 4.7575, 4.74875, 4.7625, and 4.78 respectively.
2. The current rate of exchange is 4.7545.
3. The average rate is 4.7525.
4. The rate at time of purchase of fixed assets was 4.83.
5. No account is to be taken of probable loss from uncollectible accounts nor of depreciation.