Latvia Limited made a loan to Lithuania Incorporated in exchange for a $250,000 note on July 1, 2021. This note is for a period of seven years, with interest at 4% quarterly. Assume the market rate for comparable loans is 8%. Prepare the journal entry in good form for Latvia Limited’s books
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Latvia Limited made a loan to Lithuania Incorporated in exchange for a $250,000 note on July 1, 2021.
This note is for a period of seven years, with interest at 4% quarterly. Assume the market rate for
comparable loans is 8%. Prepare the
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- On September 30, 2017, Ericson Company negotiated a two-year, 1,000,000 dudek loan from a foreign bank at an interest rate of 2 percent per year. It makes interest payments annually on September 30 and will repay the principal on September 30, 2019. Ericson prepares U.S.-dollar financial statements and has a December 31 year-end.a. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 dudek: September 30, 2017 $0.100December 31, 2017 0.105September 30, 2018 0.120December 31, 2018 0.125September 30, 2019 0.150 b. Taking the exchange rate effect on the cost of borrowing into consideration, determine the effective interest rate in dollars on the loan in each of the three years 2017, 2018, and 2019.On September 30, 2017, Ericson Company negotiated a two-year, 1,000,000 dudek loan from a foreign bank at an interest rate of 2 percent per year. It makes interest payments annually on September 30 and will repay the principal on September 30, 2019. Ericson prepares U.S.-dollar financial statements and has a December 31 year-end.a. Prepare all journal entries related to this foreign currency borrowing assuming the following exchange rates for 1 dudek:b. Taking the exchange rate effect on the cost of borrowing into consideration, determine the effective interest rate in dollars on the loan in each of the three years 2017, 2018, and 2019.Morton Company obtains a one-year loan of 3,000,000 Japanese yen at an interest rate of 7%. At the time the loan is extended, the spot rate of the yen is $.006. If the spot rate of the yen at maturity of the loan is $.0037, what is the effective financing rate of borrowing yen? Show the calculation Answer
- On January 1, 2021, a borrower was granted a loan by Qatar Bank. The loan interest is payable annually starting December 31, 2021 at an interest rate of 10%. The loan matures in five years on December 31, 2025. The principal amount of the loan is P4,000,000. The borrower was charged with origination fees in the amount of 350,000. The bank incurred P61,500 origination cost. What is the carrying amount of the loan receivable on December 31, 2021? a. 4,243,120 b. 4,000,000 c. 3,756,880 d.3,600,000PT Kirana is a company engaged in the export and import sector. January 1, 2020 PT Kirana borrowed a total of IDR 150,000,000 from Bank Pelangi for 3 years with a fixed interest rate on the loan of 9% with changes in effective interest rates, while for 2021 and 2022, the effective interest rate uses the formula “Bank Indonesia interest rates. + 2% ”as the basis for determining the loan interest rate. To avoid interest rate fluctuations, PT Kirana signs a variable-payment contract, accepts the effective interest rate (market interest) swaps with a speculator. Requested:a) Make journals to record transactions related to this swaps contract!b) In accordance with the transaction, the transaction is called a transaction? And in what kind of approach?On July 1, 2023, Mifflin Company borrowed 280,000 euros from a foreign lender, evidenced by an interest-bearing note due on July 1, 2024. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows: Date Amount July 1, 2023 (date borrowed) December 31, 2023 (Mifflin's year-end) $ 265,000 258,800 245,000 July 1, 2024 (date repaid) In Its 2024 Income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note? Multiple Choice $13,800 gain $13,800 loss $20,000 gain $20,000 loss
- On April 1, 2017, Mendoza Company borrowed 500,000 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, 2017 and will make a second interest payment on March 31, 2018 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: April 1, 2017 $ 1.10 October 1, 2017 1.20 December 31, 2017 1.24 March 31, 2018 1.28On April 1, 2017, Mendoza Company borrowed 500,000 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, 2017, and will make a second interest payment on March 31, 2018, 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:On April 1, 2017, Mendoza Company borrowed 514,000 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, 2017, and will make a second interest payment on March 31, 2018, 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: April 1, 2017 $ 1.10 October 1, 2017 1.20 December 31, 2017 1.24 March 31, 2018 1.28 Prepare all journal entries 1 Record the borrowal of the foreign loan. 2 Record the first interest payment on the foreign loan. 3 Record the year-end interest accrual on the foreign loan. 4 Record the year-end adjustment to the foreign loan. 5 Record the second interest payment and foreign exchange loss/gain. 6 Record the repayment of the loan and foreign exchange loss/gain.
- For items 1 to 2 China Bank granted a loan to a borrower on January 1, 2023. The interest rate on the loan is 10% payable annually starting December 31, 2023. The loan matures in five years on December 31, 2027. The data related to the loan are: Principal amount Direct loan origination cost Indirect loan origination cost Origination fee received from borrower P4,000,000 104,410 72,880 526,450 Note: Round-off to four decimal places the PV Factors. The effective interest rate of the loan is? (Round off answer to nearest whole number, e.g. 4%)On 1 July 2019 Celine Consultants Ltd completes a contract to provide advice on the installation of a networked computer system to a company in the US. The client pays the fee of US$700 000 into Celine Consultants’ US bank account on that date. The bank pays interest of 5 per cent annually on 30 June. The exchange rate information is: 1 July 2019 $A1 = US$0.59 30 June 2020 $A1 = US$0.67 What journal entries are required in Celine Consultants Ltd’s books for 1 July 2019 and 30 June 2020On January 7, 2021, Dang Company discounted its own P100,000, 180 day note at the Bank of the Philippine Islands at a discount rate of 20%. Dang repaid the note on the July 6, 2021, its due date. Based on a 360 day year, what was the effective rate of interest on the borrowing? Kindly show the solution please, thanks!