1. Blue Ltd. Engages in transactions involving foreign currencies, namely Australian Dollars and U.S. Dollars. Blue Ltd. Engaged in the following transactions during 2022:
   1. Purchases Inventory on 1^st July for $50,000 US$ on account, with payment due in 30 days.
   2. Purchased inventory on 17^th July for 200,000 AUD$ on account, with payment due in 90 days.
   3. Purchased Inventory on 15^th August for 75,000 US $ on account, payment due date in 90 days.
   4. Paid for the entire purchase in transaction 1 on 17^th July.
   5. Paid for the entire purchase in transaction 2 on 15^th October.
   6. Paid for the entire purchase in transaction 3 on 3^rd November.Required:

• Prepare Journal Entries for the above transactions. Blue Ltd. Maintains a perpetual Inventory system.
• Explain how the historical cost concept is applied to inventory purchases in a foreign currency.
• Explain how an exchange gain or loss may arise relating to foreign currency payables.

\begin{tabular}{|l|l|l|} \hline \multicolumn{3}{|l|}{ EXCHANGE RATES } \\ \hline Canadian Equivalencies & US\$ & AUD\$ \\ \hline 1st July & 1.09 & 1.21 \\ \hline 17th July & 1.13 & 1.29 \\ \hline 15th August & 1.18 & 1.18 \\ \hline 15th October & 1.06 & 1.09 \\ \hline 3rd November & 1.09 & 1.18 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline \multicolumn{3}{|l|}{ EXCHANGE RATES } \\ \hline Canadian Equivalencies & US\$ & AUD\$ \\ \hline 1st July & 1.09 & 1.21 \\ \hline 17th July & 1.13 & 1.29 \\ \hline 15th August & 1.18 & 1.18 \\ \hline 15th October & 1.06 & 1.09 \\ \hline 3rd November & 1.09 & 1.18 \\ \hline \end{tabular}