Question
On April 1, 2017, Mendoza Company borrowed 640,000 euros for one year at an interest rate of 5 percent per annum. Mendoza must make its
On April 1, 2017, Mendoza Company borrowed 640,000 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 .......................... $1.20 October 1, 2017 ...................... 1.30 December 31, 2017 .................. 1.34 March 31, 2018 ...................... 1.38
Need help assistance to solve solution to No. 3, 5, and 6 under DEBIT
No | Date | General Journal | Debit | Credit |
1 | 04/01/2017 | Cash | 768,000 | |
2 | 10/01/2017 | Interest expense (euro) | 20,800 | |
3 | 12/31/2017 | Interest expense (euro) | ||
4 | 12/31/2017 | Foreign exchange loss | 89,600 | |
5 | 03/31/2018 | Interest expense (euro) | ||
6 | 03/31/2018 | Foreign exchange loss |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started