PLEASE ANSWER STEP 2 ONLY Prepare the journal entries in Tab

PLEASE ANSWER STEP 2 ONLY

Prepare the journal entries in Table 1 below for this foreign currency borrowing, based on the following exchange rates for one euro:

   • September 30, 2015 . . . . . . . . . . . . . . . .    $0.110
   • December 31, 2015 . . . . . . . . . . . . . . . .     $0.115
   • September 30, 2016 . . . . . . . . . . . . . . . .    $0.130
   • December 31, 2016 . . . . . . . . . . . . . . . .     $0.135
   • September 30, 2017 . . . . . . . . . . . . . . . .    $0.160

On September 30, 2015, Dolphin Incorporated negotiated a 1,000,000 euro, two-year loan from a German bank. The annual interest on the loan is 2%. Dolphin makes annual interest payments on September 30. Dolphin will repay the loan principal on September 30, 2017. Dolphin prepares December 31 year-end financial statements in U.S. dollars.

Step 1:

Step 2:
Determine the effective cost (in U.S. dollars) of borrowing in 2015, 2016, and 2017. Use Table 2 below as a worksheet.
Table 2: Effective Cost of Borrowing
2015



2016



2017

Date Accounts Debit Credit 30/9/2015 Cash 110,000 Notes Payable 110,000 31/12/2015 Interest expense 1,150 Acrued interest 1,150 1000000*2%*.115/2 30/9/2016 Interest expense 1,300 Acrued interest 1,150 Cash 2,450 Foreign exchange loss 20,000 Notes Payable 20,000 31/12/2016 Interest expense 1,350 Acrued interest 1,350 1000000*2%*.135/2 30/9/2017 Interest expense 1,600 Acrued interest 1,350 Cash 2,950 Foreign exchange loss 30,000 Notes Payable 30,000 Notes Payables 160,000 Cash 160,000

PLEASE ANSWER STEP 2 ONLY Prepare the journal entries in Table 1 below for this foreign currency borrowing, based on the following exchange rates for one euro:

PLEASE ANSWER STEP 2 ONLY Prepare the journal entries in Tab

Solution

Get Help Now

Submit a Take Down Notice