To take advantage of high short-term interest rates, Chipotle Mexican Grill, Inc. purchased a 1,000,000 krona six-month certificate of deposit from a Swedish bank for $125,000 on October 1, 2019. The annual interest rate is 6 percent. Chipotle received the full principal and interest, in krona, on March 31, 2020, and immediately exchanged the krona for U.S. dollars at the current spot rate. Spot rates ($/krona) at December 31, 2019, and March 31, 2020, were $0.1445 and $0.1228, respectively. Chipotle is a calendar- year company, and accrues interest only at year-end. Required a. Prepare the journal entries recorded by Chipotle on October 1, 2019, December 31, 2019, and March 31, 2020. Enter answers using decimal places, when appropriate (do not round answers). Date Description Debit Credit 10/1/19 Short-term investments 125,000 0 Cash 125,000 To record the purchase of a C.D. from a Swedish bank. 12/31/19 Short-term investments 1,842 X Exchange gain 0 OX To record the purchase of a C.D. from a Swedish bank. Interest receivable 2,167.5 Interest income 0 2,167.5 To accrue interest income. 3/31/20 Exchange loss 1,842 x Short-term investments 0 To record the exchange gain or loss on the certificate of deposit. Exchange loss 325.5 Interest receivable 325.5 To record the exchange gain or loss on the interest receivable. Interest receivable 1,842 0 Interest income 1,842 To record interest income for the period 1/1/20 to 3/31/20. Foreign currency 1,842 x Short-term investments 0 1,842 x Interest receivable 0 3,684 To record the receipt of foreign currency at maturity of the C.D. Cash 1,842 x Foreign currency OX To record conversion of kronas into dollars. b. What was the effective annual rate of return on this investment? Round percentage to two decimal places (0.03645 = 3.65%). 5.894 X %