On September 30, 2020, Peace Frog International (PFI) (a U.S.-based company) negotiated a two-year, 2,500,000 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: DateU.S. Dollar per Chinese Yuan (CNY) September 30, 2020$0.140 December 31, 2020 0.145 September 30, 2021 0.160 December 31, 2021 0.165 September 30, 2022 0.190 Prepare all journal entries related to this foreign currency borrowing. The table below represents a general journal for financial transactions related to a note payable in Chinese Yuan (CNY). It includes entries for cash, interest expenses, interest payable, and foreign exchange losses across different dates from 2020 to 2022. Each entry specifies debit and credit amounts. Here's a detailed breakdown:### General Journal Transactions1. **09/30/2020** - **Cash**: Debit 350,000 - **Note Payable (CNY)**: Credit 350,0002. **12/31/2020** - **Interest Expense**: Debit 3,625 - **Interest Payable (CNY)**: Credit 3,6253. **12/31/2020** - **Foreign Exchange Loss**: Debit 12,500 - **Note Payable (CNY)**: Credit 12,5004. **09/30/2021** - **Interest Expense**: Debit 12,375 - **Interest Payable (CNY)**: Credit 3,625 - **Foreign Exchange Loss**: Credit 16,0005. **12/31/2021** - **Interest Expense**: Debit 4,125 - **Interest Payable (CNY)**: Credit 4,1256. **12/31/2021** - **Foreign Exchange Loss**: Debit 50,000 - **Note Payable (CNY)**: Credit 50,0007. **09/30/2022** - **Interest Expense**: Debit 14,875 - **Interest Payable (CNY)**: Credit 4,125 - **Foreign Exchange Loss**: Credit 19,0008. **09/30/2022** - **Note Payable (CNY)**: Debit 475,000 - **Foreign Exchange Loss**: Credit 475,000Each entry in the journal reflects financial activities, focusing on interest and foreign exchange loss calculations related to international financial obligations.

When you take out a loan denominated in a different currency, such as the Swiss franc, the money…

Answered: On September 30, 2020, Peace Frog…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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On September 30, 2020, Peace Frog International (PFI) (a U.S.-based company) negotiated a two-year, 2,500,000 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	$	0.140
December 31, 2020		0.145
September 30, 2021		0.160
December 31, 2021		0.165
September 30, 2022		0.190

Prepare all journal entries related to this foreign currency borrowing.

The table below represents a general journal for financial transactions related to a note payable in Chinese Yuan (CNY). It includes entries for cash, interest expenses, interest payable, and foreign exchange losses across different dates from 2020 to 2022. Each entry specifies debit and credit amounts. Here's a detailed breakdown:

### General Journal Transactions

1. **09/30/2020**
- **Cash**: Debit 350,000
- **Note Payable (CNY)**: Credit 350,000

2. **12/31/2020**
- **Interest Expense**: Debit 3,625
- **Interest Payable (CNY)**: Credit 3,625

3. **12/31/2020**
- **Foreign Exchange Loss**: Debit 12,500
- **Note Payable (CNY)**: Credit 12,500

4. **09/30/2021**
- **Interest Expense**: Debit 12,375
- **Interest Payable (CNY)**: Credit 3,625
- **Foreign Exchange Loss**: Credit 16,000

5. **12/31/2021**
- **Interest Expense**: Debit 4,125
- **Interest Payable (CNY)**: Credit 4,125

6. **12/31/2021**
- **Foreign Exchange Loss**: Debit 50,000
- **Note Payable (CNY)**: Credit 50,000

7. **09/30/2022**
- **Interest Expense**: Debit 14,875
- **Interest Payable (CNY)**: Credit 4,125
- **Foreign Exchange Loss**: Credit 19,000

8. **09/30/2022**
- **Note Payable (CNY)**: Debit 475,000
- **Foreign Exchange Loss**: Credit 475,000

Each entry in the journal reflects financial activities, focusing on interest and foreign exchange loss calculations related to international financial obligations.

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