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Required: Prepare all journal entries for the 21st Century Corporation in connection with the foreign currency borrowing and repayment under two transaction perspective. Also show the explanation for each journal entry.

Required: Prepare all journal entries for the 21st Century Corporation in connection with the foreign currency borrowing and repayment under two transaction perspective. Also show the explanation for each journal entry.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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21st Century Corporation, USA, manufacturers of agricultural engineering products, decided to expand its business operations and obtained a two- year note payable loan of 8,000,000 Romanian Leus from Alpha Bank, Romania on September 30, 2019. The loan carries an interest rate of 2 percent per annum. Interest payments are made annually on September 30, and the principal was repaid on September 30, 2021. 21st Century Corporation prepares U.S.- dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing from a two transaction perspective, assuming the following exchange rates for 1 Leu: Date September 30, 2019 December 31, 2019 September 30, 2020 December 31, 2020 September 30, 2021 U.S. Dollars per Leu $0.20 0.21 0.23 0.24 0.27 Required: Prepare all journal entries for the 21st Century Corporation in connection with the foreign currency borrowing and repayment under two transaction perspective. Also show the explanation for each journal entry.
Transcribed Image Text:21st Century Corporation, USA, manufacturers of agricultural engineering products, decided to expand its business operations and obtained a two- year note payable loan of 8,000,000 Romanian Leus from Alpha Bank, Romania on September 30, 2019. The loan carries an interest rate of 2 percent per annum. Interest payments are made annually on September 30, and the principal was repaid on September 30, 2021. 21st Century Corporation prepares U.S.- dollar financial statements and has a December 31 year-end. Prepare all journal entries related to this foreign currency borrowing from a two transaction perspective, assuming the following exchange rates for 1 Leu: Date September 30, 2019 December 31, 2019 September 30, 2020 December 31, 2020 September 30, 2021 U.S. Dollars per Leu $0.20 0.21 0.23 0.24 0.27 Required: Prepare all journal entries for the 21st Century Corporation in connection with the foreign currency borrowing and repayment under two transaction perspective. Also show the explanation for each journal entry.
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