21st Century Corporation, USA, manufacturers of agricultural engineering products, decidedto expand its business operations and obtained a two- year note payable loan of 8,000,000Romanian Leus from Alpha Bank, Romania on September 30, 2019. The loan carries aninterest 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 relatedto this foreign currency borrowing from a two transaction perspective, assuming the followingexchange rates for 1 Leu:DateSeptember 30, 2019December 31, 2019September 30, 2020December 31, 2020September 30, 2021U.S. Dollars per Leu$0.200.210.230.240.27Required:Prepare all journal entries for the 21st Century Corporation in connection with the foreigncurrency borrowing and repayment under two transaction perspective. Also show theexplanation for each journal entry.

Here discuss about the details of the Foreign exchange currency transaction which are incurred for…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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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