Question
On April 1, 2020, Mendoza Company (a U.S.-based company) borrowed 516,000 euros for one year at an interest rate of 5 percent per annum. Mendoza
On April 1, 2020, Mendoza Company (a U.S.-based company) borrowed 516,000 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, 2020, and will make a second interest payment on March 31, 2021, 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:
| Date | U.S. Dollar per Euro | ||
| April 1, 2020 | $ | 1.12 | |
| October 1, 2020 | 1.22 | ||
| December 31, 2020 | 1.26 | ||
| March 31, 2021 | 1.30 | ||
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Auditing Cases An Interactive Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
5th edition
132567237, 978-0132998345, 132998343, 978-0132567237
