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On January 1st 2018 American Company borrowed £ 1,000,000.00 when the pound sterlling was worth $1.50 This 8% 3 year loan has interest payments on July 1 and January 1 each year with the entire principle due at maturity Additional information is due as follows: spot rates per pound 1/1/2018 1.50 7/1/2018 $ 1.65 12/31/2018 $ 1.60 7/1/2019$ 1.75 12/31/2019 $ 1.80 /1/2020 $ 1.76 2/31/2020 1.55 REQUIRED: Make the necessary journal entries connected with this loan beginning January 1, 2018 and ending with the paying off of the loan on January 1, 2021

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E 1,000,000.00 $1,500,000.00 (1000000*1.5 1-Jan 18 Loan 1/1/2018 Bank A/c $1,500,000.00 $1,500,000.00 Duration 3 years Rate Rate To Loan A/c 896 P.A 4% Half year Being loan borrowed 7/1/2018 Interest $66,000.00 Bank A/c (Interest paid) $66,000.00 2-1,000,000 pound4% -->1.5*1,000,0000 pound 1/1/20181.50 E1,000,000.00 $1,500,000.00 31/12/2018 Interest $64,000.00 Bank A/c $64,000.00 3-2*1 (Interest paid) $/Pound 7/1/20181 1.65 E 40,000.00$ 66,000.00 1.60 E 40,000.00$ 64,000.00 1.75 £ 40,000.00$ 70,000.00 1.80 E 40,000.00$ 72,000.00 1.76 E 40,000.00$ 70,400.00 1.55 E 40,000.00$ 62,000.00 7/1/2019 Interest $ 70,000.00 31/12/2018 7/1/2019 31/12/2019 Bank A/c $ 70,000.00 (Interest paid) 7/1/20201 31/12/2019 Interest $ 72,000.00 31/12/2020 Bank A/c $ 72,000.00 (Interest paid) 1/1/2021 1.55 £1,000,000.00 1,550,000.00 7/1/2020 Interest $ 70,400.00 Bank A/c $ 70,400.00 (Interest paid) 31/12/2020 Interest $62,000.00 Bank A/c $62,000.00 (Interest paid) 1/1/2021 Loan A/c $1,500,000.00 $ 50,000.00 Exchange loss Bank A/c (Loan paid) $1,550,000.00

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