On 1 May 2020 Cabra Ltd secures a loan from a financial institution in United Kingdom. The money is sent from England on 1 May 2020 to Funnel Ltd in Australia. The loan is valued at 250 000 for 10 years at 5%. Interest to be paid at 30th June every year.

Exchange rates are as follows:

1 st May 2020 A$1.00 = 0.55

30th June 2020 A$1.00 = 0.75

Cabra Ltd uses standard accounting entries in its system. What entries are required at transaction date and reporting date (rounded to the nearest whole A$)?

Required:

Prepare general journal entries (3 journal entries; 1st May 2020 and 30th June 2020) to record the secure of loan and any fluctuation in currency by Cabra Ltd for the year ended 30 June 2020 in accordance with the requirements of AASB 121.