On 1st July 2015, Lola Ltd (an Australian company) enters into an agreement to borrow US$9 million from a bank in America. The bank transfers the money to Lola Ltd's Australian bank account. The loan is for four years and requires the payment of interest at the rate of 8% on 30 June each year (in arrears). Lola Ltd's reporting date is 30 June.

The exchange rates are as follows:

1 July 2015 1.00 AUD=US$0.78

31 May 2016 1.00 AUD=US$0.74

30 June 2016 1.00 AUD=US$0.76

30 July 2016 1.00 AUD=US$0.73

Required

1. Record the journal entries that would be made in the books of Lola Ltd to account for the above transaction for the year ending 30 June 2016 (rounded to the nearest whole $A). Narrations are not required.

2. Explain (with new journal entries if required) the affect on your journal entries if the interest was paid 30 days late.