Question 1: (20 Marks) Part A: (10 Marks) Lucky Ltd. whose registered office is in Hong Kong, conducts operations and transactions both in Hong Kong and overseas. HKD is its functional currency. During the year ended 31 December 2011, Lucky was involved in various transactions in foreign currencies. Lucky Ltd. purchased merchandises for resale purpose amounting to Australian dollar $150,000 on 1 October 2011, in which 80% of these merchandises were sold before the year-end. There were no other purchases of merchandises during 2011. Lucky settled 75% of the merchandises purchased amount on 15 December 2011 and the balance was paid on 20 January 2012. On 31 December 2011, the estimated net realizable value of the ending inventories was at A$24,000. In complying with HKAS 2 "Inventories", the inventory should be recorded by the lower of the cost and net realizable value. Relevant exchange rates were as follow: Spot rate 1 October 2011 A$1 = HK$8.2 15 December 2011 A$1 = HK$7.8 31 December 2011 A$1 = HK$8.3 20 January 2012 A$1 = HK$8.1 (Note: A$=Australian dollar) Required: Prepare ALL journal entries for the years 2011 and 2012 relating the acquisition of merchandises, settlement of debt, exchange difference, and ending inventories (if any). (10 marks)