On September 30, 2020, Peace Frog International (PFI) (a U.S.-based company) negotiated a two-year, 3,000,000 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

1. Prepare all journal entries related to this foreign currency borrowing.
2. 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.

5 related to this foreign currency borrowing. (Do not round intermediate calculations. If no e Vevent, select "No journal entry required" in the first account field.) General Journal Debit Credit Cash 570,000 Note payable (CNY) 570,000 2,325 x nterest expense Interest payable (CNY) 2,325 15,000 Foreign exchange loss Note payable (CNY) 15,000 2,325 nterest expense nterest payable (CNY) Foreign exchange loss Cash 3,225 x nterest expense Interest payable (CNY) OO 3,225 0 125,775 X Foreign exchange loss Note payable (CNY) 125,775 nterest expense 3,225 x 10,800 x nterest payable (CNY) Foreign exchange loss Cash 375 x 14,400 682,500 Note payable (CNY) Foreign exchange loss Cash OOO 37,500 x 720,000 X Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Taking the exchange rate effect on the cost of borrowing into consideration, determine t dollars on the loan in each of the three years 2020, 2021, and 2022. (Do not round inte Effective Cost of Borrowing $ 9,825 $ 40,500 X 2020 2021 2022 $ 46,875