On April 1, 2017, Mendoza Company borrowed 460,000 euros for one year at an interest rate of
Question:
On April 1, 2017, Mendoza Company borrowed 460,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its first interest payment on the loan on October 1, 2017 and will make a second interest payment on March 31, 2018 when the loan is repaid. Mendoza prepares U.S.-dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 euro:
April 1, 2017 $1.14
October 1, 2017 1.24
December 31, 2017 1.28
March 31, 2018 1.32
Prepare Journal Entries for the following:
1. Record the borrowal of the foreign loan.
2. Record the first interest payment on the foreign loan.
3. Record the year end interest accrual on the foreign loan.
4. Record the year end adjustment to the foreign loan.
5. Record the second interest payment and foreign exchange loss/gain
6. Record the repayment of the loan and foreign exchange loss/gain
Expert Answer:
Particulars No Date 1 April 1 Cash Ac Dr To payable foreign loan Ac To Record the borrowal of the ... View the full answer
