On 1 May 2015 Harriet's Importers Ltd acquires goods from a supplier in Britain.The goods are shipped f.o.b.from England on 1 May 2015.The cost of the goods is £200 000.The amount has not been paid at period end 30 June 2015.Exchange rates are as follows:

\begin{array} { | l | l | } \hline 1 \text { May } 2015 & \text { A\$1.00 } = £ 0.46 \\\hline 30 \text { June } 2015 & \text { A\$1.00 } = £ 0.50 \\\hline\end{array}

Harriet's Importers Ltd uses a perpetual inventory system.
What entries are required at transaction date and reporting date (rounded to the nearest whole A$)?
A)

1 \text { May } 2015

\begin{array}{|l|l|r|r|}\hline \text { Dr } & \text { Accounts receivable } & 92000 & \\\hline \mathrm{Cr} & \text { Inventory } & & 92000 \\\hline\end{array}

3 \text { June } 2015

\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Accounts receivable } & 8000 & \\\hline \mathrm{Cr} & \text { Exchange gain (P\&L) } & & 8000 \\\hline\end{array}

1 \text { May } 2015

\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Inventory } & 434783 & \\\hline \mathrm{Cr} & \text { Accounts payable } & & 434783 \\\hline\end{array}

3 \text { June} 2015

\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Accounts payable } & 34783 & \\\hline \mathrm{Cr} & \text { Exchange gain (P\&L) } & & 34783 \\\hline\end{array}

\begin{array}{l}1 \text { May } 2015\\\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Purchases } & 108000 & \\\hline \mathrm { Cr } & \text { Cash } & & 108000 \\\hline\end{array}\\\\30 \text { June } 2015 \\\begin{array}{|l|l|l|l|}\hline \mathrm { Dr } & \text { Accounts payable } & 8000 & \\\hline \mathrm { Cr } & \text { Exchange gain } ( \mathrm { P \& L } ) & & 8000 \\\hline\end{array}\end{array}

\begin{array}{l}1 \text { May } 2015\\\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Inventory } & 370370 & \\\hline \mathrm { Cr } & \text { Accounts payable } & & 370370 \\\hline\end{array}\\\\30 \text { June } 2015\\\begin{array}{|l|l|l|l|}\hline \mathrm { Dr } & \text { Exchange loss } & 29630 & \\\hline \mathrm { Cr } & \text { Accounts payable } & & 29630 \\\hline\end{array}\end{array}

The Functional Currency of an Entity

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