Question 6 (7 marks)

On 1 October 2015, Mirvac Ltd acquires goods on credit from a US supplier. The cost of the goods is US$400,000 and this amount remains unpaid at 31 December 2015 at the time of year end accounts closing. The amount was paid at 20 January 2016.

On 1 October 2015, the exchange rate is A$1.00 = US$ 0.71.

On 31 December 2015, the exchange rate is A$1.00 = US$ 0.73.

On 20 January 2016, the exchange rate is A$1.00 = US$0.70

Required:

1. Determine the amount of the debt in AUD, as at: (3 marks)

• 1 October 2015 and
• 31 December 2015.
• 20 January 2016

(ii) Prepare the journal entries for the above dates showing the amount of exchange gain or loss. (4 marks)