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Fry Ltd a UK - based Company - the Sterling Pound is its functional currency - had the following foreign currency transactions with an American
Fry Ltd a UKbased Company the Sterling Pound is its functional currency had the following
foreign currency transactions with an American company in the year to
Purchased Merchandise Inventory for $ on account from Texas Inc.
Sold merchandise Inventory for $ on account to Alamos Inc ignore cost of goods
sold
Pays Texas Inc $ for the merchandise inventory purchased
Receives $ on account from Alamos.
Purchased a PPE for $ from Chicago on credit.
Borrows $ from an American bank
Pays Chicago Inc $ for the machinery
The exchange rates at the relevant dates were:
$ Sterling Pound
$ Sterling Pound
$ Sterling Pound
$ Sterling Pound
The PPE purchased on November is carried at historical cost in the company's statement of
financial position at December The cost of the company's inventory at that date does not
exceed its nets realisable value
Required:
Record the above transactions in the books of Fry
Calculate the exchange difference for the year to December and explain how this
difference should be dealt with in the company's financial statements?
What is the journal entry if Fry pays Chicago the remaining $ after the reporting date
on January The exchange rate at was $ Sterling Pound
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