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

15/11Purchased 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

20/11Receives $30,000 on account from Alamos.

20/11Purchased 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:

15/111$= 0.3846 Sterling Pound

20/111$= 0.4167 Sterling Pound

21/121$= 0.4348 Sterling Pound

31/121$= 0.4762 Sterling Pound

The PPE purchased on 20 November 2009 is carried at historical cost in the companys statement of financial position at 31 December 2009. The cost of the companys 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 companys financial statements?

3- What is the journal entry if Fry pays Chicago the remaining $20,000 after the reporting date on 4 January 2010. The exchange rate at 4/1/2010 was 1$= 0.4800 Sterling Pound