On August 1,Deluka Computers,Inc

question 120

Multiple Choice

On August 1,Deluka Computers,Inc.purchased thirty computer chips,on account,from a company located in Taiwan for 500,000 Taiwan dollars.On that date the Taiwan dollar is worth $0.040.On September 1,when the Taiwan dollar was worth $0.038,payment was made.Deluka Computers uses the perpetual inventory system.The journal entry on August 1 by Deluka Computers,Inc.would be:

• A)debit Inventory $19,000 and credit Accounts Payable $19,000.
• B)debit Inventory $20,000 and credit Accounts Payable $20,000.
• C)debit Inventory $20,000,credit Foreign-Currency Transaction Gain $1,000,and credit Accounts Payable $19,000.
• D)debit Inventory $20,000 and credit Cash $20,000.

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