On September $30,2020,$ Peace Frog International $($PFI$)($a U$.$S$.-$based company$)$ negotiated a two$-$year, $1,600,000$ Chinese yuan loan

from a Chinese bank at an interest rate of $4$ percent per year. The company makes interest payments annually on September $30$ and

will repay the principal on September $30,2022.$ PFI prepares U$.$S$.$ dollar financial statements and has a December $31$ year$-$end.

Relevant exchange rates are as follows:

a$.$ Prepare all journal entries related to this foreign currency borrowing.

b$.$ Taking the exchange rate effect on the cost of borrowing into consideration, determine the effective interest rate in U$.$S$.$ dollars on

the loan in each of the three years $2020,2021,$ and $2022.\backslash$table$[[$No$,$Date,General Journal,Debit,Credit$],[1,09/30/2020,$Cash,$(,256,000,],[,$Note payable $($CNY$),(,,256,000],[2,12/31/2020,$Interest expense,$>,2,640,],[,$Interest payable $($CNY$),,,2,640],[3,12/31/2020,$Foreign exchange loss,$(>),8,000,],[,$Note payable $($CNY$),(,,8,000],[4,09/30/2021,$Interest expense,$(,8,640,],[,$Interest payable $($CNY$),(,2,640,],[,$Foreign exchange loss,$(,240*,],[,$Cash,$(,,11,520],[5,12/31/2021,$Interest expense,$($c$),2,960,],[,$Interest payable $($CNY$),(,,2,960],[6,12/31/2021,$Foreign exchange loss,$(,32,000,],[,$Note payable $($CNY$),(,,32,000],[7,09/30/2022,$Interest expense,$(,10,080,],[,$Interest payable $($CNY$),(,2,960,],[,$Foreign exchange loss,$(,400,],[,$Cash,$(,,13,440],[8,09/30/2022,$Note payable $($CNY$),,296,000,],[,$Foreign exchange loss,$(,40,000,],[,$Cash,$,,336,000]]$