Question 3: (15 Marks) Part A: (7 Marks)

On 5 June 2022 Perth Ltd acquires goods on credit from a supplier in London. The goods are shipped FOB London on 5 June 2022. The cost of the goods is UK250,000 and the debt remains unpaid at 30 June 2022. On 5 June 2022 the exchange rate is A$1.00 = UK0.46. On 30 June 2022 it is A$1.00 = UK0.44. Hence the value of the Australian dollar has decreased relative to the UK pound. Perth Ltd's reporting date is 30 June.

Provide the accounting entries necessary to account for the above purchase transaction for the year ending 30 June 2022.

Part B: (8 Marks)

On 1 July 2021 Double Island Ltd enters into an agreement to borrow 2 million from Point plc (UK). Point plc sends the loan money to Double Island Ltd's Australian bank account. The loan is for four years and requires the payment of interest at the rate of 8 per cent on 30 June each year. Double Island Ltd's reporting date is 30 June.

The relevant exchange rates are:

1 July 2021 A$1.00= UK0.48

30 June 2022 A$1.00 = UK0.50

Provide the necessary journal entries that would be made in the books of Double Island Ltd to account for the above transaction for the year ending 30 June 2022. LO 28.5

Note:- This is only one question but has two parts related to each other please provide answer for both parts. Thanks