On September $30,2023,$ Peace Frog International $($PFI$)($a U$.$S$.-$based company$)$ negotiated a two$-$year, $2,100,000$ 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 $30,2025.$ PFI prepares U$.$S$.$ dollar financial statements and has a December $31$ year$-$end. Relevant exchange rates are as follows: DateU.S$.$ Dollar per Chinese Yuan $($CNY$)$September $30,2023$$ $0\mathrm{.}100$December $31,20230\mathrm{.}105$September $30,20240\mathrm{.}120$December $31,20240\mathrm{.}125$September $30,20250\mathrm{.}150$ Required: Prepare all journal entries related to this foreign currency borrowing. Taking the exchange rate effect on the cost of borrowing into consideration, determine the U$.$S$.$ dollar "effective borrowing rate" on the loan in each of the three years $2023,2024,$ and $2025.$

On September $30,2023,$ Peace Frog International $($PFI$)($a U$.$S$.-$based company$)$ negotiated a two$-$year, $2,100,000$ 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 $30,2025.$ PFI prepares U$.$S$.$ dollar financial statements and has a December $31$ year$-$end.

Relevant exchange rates are as follows:

Required:

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 U$.$S$.$ dollar "effective borrowing rate" on

the loan in each of the three years $2023,2024,$ and $2025.$

Journal entry worksneet

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Record the accrued interest for the period $09/30/2023-12/31/2023.$

Note: Enter debits before credits.

Date General Journal Debit Credit $12/31/2023$

Record to revalue the note payable at the spot rate, and record the foreign

exchange gain or loss thereof.

Note: Enter debits before credits.

Record the first annual interest payment, record interest expense for the

period $01/01/2024-09/30/2024,$ and record a foreign exchange gain or loss

on the interest payable accrued at $12//31//2023.$

Note: Enter debits before credits.

Record the accrued interest for the period $09/30/2024-12/31/2024.$

Note: Enter debits before credits.

Record to revalue the note payable at the spot rate, and record the foreign exchange gain or loss thereof.

Record the first annual interest payment, record interest expense for the period $01/01/202409/30/2024,$ and record a foreign exchange gain or loss on the interest payable accrued at $12/31/2023.$

Record the accrued interest for the period $09/30/202412/31/2024.$

Record to revalue the note payable at the spot rate, and record the foreign exchange gain or loss thereof.

Record the second annual interest payment, record interest expense for the period $01/01/202509/30/2025,$ and record a foreign exchange gain or loss on the interest payable accrued at $12/31/2024.$

Record the payment of $1$ million yuan note.