Freedom Electronics Inc. completed the following transactions:

2020

Dec. 1 Sold machinery on account to a Japanese company for $45,000. The exchange rate of the Japanese yen is $0.0113, and the Japanese company agrees to pay in Canadian dollars.

10 Purchased supplies on account from a US company at a price of US$125,000. The exchange rate of the US dollar is $1.06, and payment will be in US dollars.

17 Sold machinery on account to an English firm for 220,000 British pounds. Payment will be in pounds, and the exchange rate of the pound is $1.61.

22 Collected from the Japanese company. The exchange rate of the yen has not changed since December 1.

31 Adjusted the accounts for changes in foreign-currency exchange rates. Current rates: US dollar, $1.10; British pound, $1.59.

2021

Jan. 18 Paid the US company. The exchange rate of the US dollar is $1.08.

24 Collected from the English firm. The exchange rate of the British pound is $1.63.

Required

1. Record these transactions in Freedom Electronics’ general journal, and show how to report the transaction gain or loss on the income statement for the fiscal year ended December 31, 2020. For simplicity, use Sales Revenue as the credit.

2. How will what you have learned in this problem help you structure international transactions?