On December 1, 2013, Mayberry Inc. purchased inventory on account from a U.S. supplier for U.S. $40,000

Question:

On December 1, 2013, Mayberry Inc. purchased inventory on account from a U.S. supplier for U.S. $40,000 when the exchange rate was U.S. $1 = C$0.97. The inventory was still on hand at Mayberry’s year end, December 31, 2013, and the account had not been paid. The exchange rate at December 31, 2013, was U.S. $1 = C$1.02. The account was paid on February 1, when the exchange rate was U.S. $1 = C$1.06.

Required

(a) At what amounts should the inventory and the account payable relating to the above transactions be reported on the December 31, 2013, statement of financial position?

(b) What exchange gain or loss will be reported in 2013 relating to the above transactions?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...