Please help me aJournalHrean09/30/2020Cash100,000 ०Note payable (CNY)100,000 O12/31/2020Interest expense525 OInterest payable (CNY)525 OForeign exchange gain or lossNote payable (CNY)12/31/20205,000 O5,00009/30/2021Interest expense4.475Interest payable (CNY)Foreign exchange gain or loss525 A5,000Cash100,000 X12/31/2021Interest expense625Interest payable (CNY)62512/31/2021Foreign exchange gain or loss20.00020 000Note navahle (CNY)12/31/2021Interest expense625Interest payable (CNY)62512/31/2021Foreign exchange gain or loss20,000 ONote payable (CNY)20,0009/30/2022Interest expenseInterest payable (CNY)Foreign exchange gain or loss625Cash9/30/2022Foreign exchange gain or lossNote payable (CNY)25,000 O125,000Cash150.000Reauired B On September 30, 2020, Peace Frog International (PF) (a U.S.-based company) negotiated a two-year, 1,000,000 Chinese yuan loanfrom a Chinese bank at an interest rate of 2 percent per year. The company makes interest payments annually on September 30 andwill 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:U.S. Dollarper ChineseYuan (CNY)$0.100DateSeptember 30, 2020December 31, 2020September 30, 2021December 31, 2021September 30, 20220.1050.1200.1250.150a. 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. dotlars onthe loan in each of the three years 2020, 2021, and 2022.

Answered: Lebit ured 9/30/2020 Cash 100,000 Note…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

ChapterP2: Part 2: Exchange Rate Behavior

Section: Chapter Questions

Problem 1Q

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The nominal yield on 6-month T-bills is 7%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 5.5%. In the spot exchange market, 1 yen equals $0,009. If interest rate parity holds, what is the 6-month forward exchange rate?
On September 30, 2020, Peace Frog International (PFI) (a U.S.-based company) negotiated a two-year, 1,000,000 Chinese yuan loan from a Chinese bank at an interest rate of 2 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: Date U.S. Dollar per Chinese Yuan (CNY) September 30, 2020 $ 0.100 December 31, 2020 0.105 September 30, 2021 0.120 December 31, 2021 0.125 September 30, 2022 0.150 Prepare all journal entries related to this foreign currency borrowing. 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.
On September 30, 2020, Peace Frog International (PFI) (a U.S.-based company) negotiated a two-year, 2,500,000 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: Date U.S. Dollar per Chinese Yuan (CNY) September 30, 2020 $ 0.140 December 31, 2020 0.145 September 30, 2021 0.160 December 31, 2021 0.165 September 30, 2022 0.190 Prepare all journal entries related to this foreign currency borrowing.
On September 30, 2020, Peace Frog International (PFI) (a U.S.-based company) negotiated a two-year, 1,900,000 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: Date U.S. Dollar per Chinese Yuan (CNY) September 30, 2020 $ 0.190 December 31, 2020 0.195 September 30, 2021 0.210 December 31, 2021 0.215 September 30, 2022 0.240 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.
On September 30, 2017, Ericson Company negotiated a two-year, 1,000,000 dudek loan from a foreign bank at an interest rate of 2 percent per year. It makes interest payments annually on September 30 and will repay the principal on September 30, 2019. Ericson prepares U.S.-dollar financial statements and has a December 31 year-end.a. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 dudek:b. Taking the exchange rate effect on the cost of borrowing into consideration, determine the effective interest rate in dollars on the loan in each of the three years 2017, 2018, and 2019.
On April 1, 2017, Mendoza Company borrowed 500,000 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:
On May 8, 2019, Jett Company (a U.S. company) made a credit sale to Lopez (a Mexican company). The terms of the sale required Lopez to pay 800,000 pesos on February 10, 2020. Jett prepares quarterly financial statements on March 31, June 30, September 30, and December 31. The exchange rates for pesos during the time the receivable is outstanding follow. Compute the foreign exchange gain or loss that Jett should report on each of its quarterly income statements for the last three quarters of 2019 and the first quarter of 2020. Also compute the amount reported on Jett’s balance sheets at the end of each of its last three quarters of 2019. May 8, 2019 . $0.1323 June 30, 2019 . 0.1352 September 30, 2019 . 0.1368 December 31, 2019 0.1335 February 10, 2020 . 0.1386
On April 1, 2017, Mendoza Company borrowed 514,000 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 $ 1.10 October 1, 2017 1.20 December 31, 2017 1.24 March 31, 2018 1.28 Prepare all journal entries 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.
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On December 1, 2017, Ringling Company (a U.S.-based company) entered into a three-month forward contract to purchase 1,000,000 pesos on March 1, 2018. The following U.S. dollar per peso exchange rates apply: Date Spot Rate ForwardRate (to March 1, 2018)Dec1, 2017 $0.044 $0.047 Dec 31, 2017 0.046 0.049 March 1, 2018 0.050 N/A Ringling’s incremental borrowing rate is 12 percent. The present value factor for two months at an annual interest rate of 12 percent (1 percent per month) is 0.9803.Which of the following correctly describes the manner in which Ringling Company will report the forward contract on its December 31, 2017, balance sheet? Choose the correct.a. As an asset in the amount of $1,960.60.b. As an asset in the amount of $2,940.90.c. As a liability in the amount of $980.30.d. As a liability in the amount of $2,940.90.
On December 1, 2020, Venice Company (a U.S.-based company) entered into a three-month forward contract to purchase 1,410,000 pesos on March 1, 2021. The following U.S. dollar per peso exchange rates apply: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 0.026 $ 0.029 December 31, 2020 0.028 0.031 March 1, 2021 0.032 N/A Ignoring present values, Which of the following correctly describes the manner in which Venice Company will report the forward contract on its December 31, 2020, balance sheet? As an asset in the amount of $1,410 As a liability in the amount of $1,410 As an asset in the amount of $2,820 As a liability in the amount of $2,820

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Lebit ured 9/30/2020 Cash 100,000 Note payable (CNY) 100,000 2/31/2020 Interest expense 525 Interest payable (CNY) 525 2/31/2020 Foreign exchange gain or loss 5,000