Question:
On October 31, 2012, Darling Company negotiated a two-year 100,000 franc loan from a foreign bank at an interest rate of 3 percent per year. Interest payments are made annually on October 31, and the principal will be repaid on October 31, 2014. Darling 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:
|
Franc Rate
|
|
Oct. 31, 2012
|
$0.50
|
|
Dec. 31, 2012
|
$0.52
|
|
Oct. 31, 2013
|
$0.60
|
|
Dec. 31, 2013
|
$0.62
|
|
Oct. 31, 2014
|
$0.75
|