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Q1. On September 30, 2020, Peace Frog International (PFI) (a U.S.-based company) negotiated a two-year, 1,000,000 Chinese yuan loan from a Chinese bank at an interest rate of 2 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:

U.S. Dollar per Date Chinese Yuan (CNY) September 30, 2020 $0.100 December 31, 2020 0.105 September 30, 2021 0.120 December 31, 2021 0.125 September 30, 2022 0.150NO DATE ACCOUNT DEBIT CREDIT 1 9/30/2020 CASH $ 100,000.00 NOTES PAYABLE $ 100,000.00 2 12/31/2020 INTEREST EXP. $ 525.00 INTEREST PAYABLE $ 525.00 3 12/31/2020 FOREIGN EXCHANGE GAIN OR LOSS $ 5,000.00 NOTES PAYABLE $ 5,000.00 4 9/30/2021 INTEREST EXP. $ 1,875.00 INTEREST PAYABLE 525.00 FOREIGN EXCHANGE GAIN OR LOSS $ 1,350.00 CASH $ 2,400.00 5 12/31/2021 INTEREST EXP. $ 625.00 INTEREST PAYABLE $ 625.00 6 12/31/2021 FOREIGN EXCHANGE GAIN OR LOSS $ 20,000.00 NOTES PAYABLE $ 20,000.00 7 9/30/2022 INTEREST EXP. $ 2,375.00 INTEREST PAYABLE 625.00 FOREIGN EXCHANGE GAIN OR LOSS S 1,750.00 CASH $ 3,000.00 8 9/30/2022 NOTES PAYABLE $ 100,000.00 FOREIGN EXCHANGE GAIN OR LOSS $ 50,000.00 CASH $ 150,000.00