Sheepskin Inc imports furs from Australia.

Dec. 15, 2020: Purchased furs from Captain Ltd., an Australian corporation, at a price of 25,000 Australian dollars, due in 2 months. The current exchange rate is $0.89 U.S. dollars per Australian dollar. (Sheepskin uses the perpetual inventory method)

Dec. 31, 2020: Sheepskin Inc. made a year-end adjusting entry relating to the account payable to Captain Ltd. The exchange rate at year-end is $0.945 U.S. dollars per Australian dollar. Feb. 7, 2021: Issued a check for $21,750 (U.S. dollars) to Citi Bank in full settlement of the liability to Captain Ltd. The exchange rate at this date is $0.87 U.S. dollars per Australian dollar. Prepare journal entries to record the transactions above.