On September 30, 2015, Ericson Company negotiated a two-year, 2,400,000 dudek loan from a foreign bank at an interest rate of 4 percent per year. It makes interest payments annually on September 30 and will repay the principal on September 30, 2017. Ericson prepares U.S.-dollar financial statements and has a December 31 year-end.

September 30, 2015	$	0.130
December 31, 2015		0.135
September 30, 2016		0.150
December 31, 2016		0.155
September 30, 2017		0.180

a.

Prepare all journal entries related to this foreign currency borrowing assuming the above exchange rates for 1 dudek. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b) Determine the effective cost of borrowing in dollars in each of the three years 2015, 2016, and 2017. (Do not round intermediate calculations.)

HERE IS WHAT I HAVE SO FAR FOR JOURNAL ENTRIES BUT I DON'T HAVE ANY ANSWERS FOR QUESTION B.

09/30/2015	Cash	312,000
2		Note payable (dudek)		312,000
3
4	12/31/2015	Interest expense	3,240
5		Interest payable (dudek)		3,240
6
7	12/31/2015	Foreign exchange loss	12,000
8		Note payable (dudek)		12,000
9
10	09/30/2016	Interest expense
11		Interest payable (dudek)	3,240
12		Foreign exchange loss
13		Cash
14
15	12/31/2016	Interest expense	3,720
16		Interest payable (dudek)		3,720
17
18	12/31/2016	Foreign exchange loss	48,000
19		Note payable (dudek)		48,000
20
21	09/30/2017	Interest expense
22		Interest payable (dudek)	3,720
23		Foreign exchange loss
24		Cash
25
26	09/30/2017	Note payable (dudek)
27		Foreign exchange loss
28		Cash