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4Question 3 -Week 10(7marks)On 1 March 2020Holmes Ltd enters into a binding agreement with a New...

4Question 3 -Week 10(7marks)On 1 March 2020Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021and shipped FOB Auckland on that date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s reporting date.The exchange rates at the relevant dates are:

1 March 2020     A$1.00 = NZ$1.20

1 June 2020         A$1.00 = NZ$1.30

30 June 2020      A$1.00 = NZ$1.25

Required:a)Determine the amount inAUD, as at:•1 March 2020; and•30June 2020.b)Prepare the journal entries for the above dates, up to 1 June 2021,showing the amount of exchange gain or loss.

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