On Dec 20, a US firm purchased equipment worth $1,000 Euros on account. The payment was made on Jan 20 (There is no forward contract taken here) 

Exchange rates:

1. 1 Euro = $1.30 20-Dec
2. 1 Euro = $1.40 31-Dec
3. 1 Euro = $1.45 20-Jan 
4. 
   

Required

1. What is the journal entry for the transaction on Dec 20? 
2. 
   
3. Refer to the question above. Based on the change in the exchange rate. What gain or loss will be recorded on Dec 31?