Fry Ltd a UK$-$based Company$-$ the Sterling Pound is its functional currency$-$ had the following

foreign currency transactions with an American company in the year to $31/12/2009$

$15/11$ Purchased Merchandise Inventory for $$40,000$ on account from Texas Inc.

$15/11$ Sold merchandise Inventory for $$60,000$ on account to Alamos Inc$-$ ignore cost of goods

sold

$20/11$ Pays Texas Inc $$30,000$ for the merchandise inventory purchased

$\frac{20}{11}$ Receives $$30,000$ on account from Alamos.

$20/11$ Purchased a PPE for $$100,000$ from Chicago on credit.

$20/11$ Borrows $$90,000$ from an American bank

$21/12$ Pays Chicago Inc $$80,000$ for the machinery

The exchange rates at the relevant dates were:

$\frac{15}{111}$$$=0\mathrm{.}3846$ Sterling Pound

$\frac{20}{11}$$$=0\mathrm{.}4167$ Sterling Pound

$\frac{21}{121}$$$=0\mathrm{.}4348$ Sterling Pound

$\frac{31}{121}$$$=0\mathrm{.}4762$ Sterling Pound

The PPE purchased on $20$ November $2009$ is carried at historical cost in the company's statement of

financial position at $31$ December $2009.$ The cost of the company's inventory at that date does not

exceed its nets realisable value

Required:

$1-$ Record the above transactions in the books of Fry

$2-$ Calculate the exchange difference for the year to $31$ December $2009$ and explain how this

difference should be dealt with in the company's financial statements?

$3-$ What is the journal entry if Fry pays Chicago the remaining $$20,000$ after the reporting date

on $4$ January $2010.$ The exchange rate at $\frac{4}{1}\frac{?}{2010}$ was $1$$$=0\mathrm{.}4800$ Sterling Pound