Prairie Dog Inc. borrowed US$10,000,000 on January 1, 2017 at an annual rate of 8%. The loan is due December 31, 2020 and interest is payable annually each December 31. The exchange rates on selected dates throughout the life of the loan are shown below:
$\begin{array}{|l|l|}\hline \text { January } 1,2017 & \text { CDN } \$ 1.4415 \\\hline \text { December } 31,2017 & \text { CDN } \$ 1.4325 \\\hline \text { December } 31,2018 & \text { CDN } \$ 1.4575 \\\hline \text { December } 31,2019 & \text { CDN } \$ 1.4435 \\\hline \text { December } 31,2020 & \text { CDN } \$ 1.4525 \\\hline\end{array}$ Assume that the average annual exchange rate was equal to the December 31^st spot rates.
Prepare the journal entries for 2017.

Question

Prairie Dog Inc. borrowed US$10,000,000 on January 1, 2017 at an annual rate of 8%. The loan is due December 31, 2020 and interest is payable annually each December 31. The exchange rates on selected dates throughout the life of the loan are shown below:

\begin{array}{|l|l|}\hline \text { January } 1,2017 & \text { CDN } \$ 1.4415 \\\hline \text { December } 31,2017 & \text { CDN } \$ 1.4325 \\\hline \text { December } 31,2018 & \text { CDN } \$ 1.4575 \\\hline \text { December } 31,2019 & \text { CDN } \$ 1.4435 \\\hline \text { December } 31,2020 & \text { CDN } \$ 1.4525 \\\hline\end{array}

Assume that the average annual exchange rate was equal to the December 31^st spot rates.
Prepare the journal entries for 2017.

Quizplus · Accepted Answer

The Answer of Prairie Dog Inc. borrowed US$10,000,000 on January 1, 2017 at an annual rate of 8%. The loan is due December 31, 2020 and interest is payable annually each December 31. The exchange rates on selected dates throughout the life of the loan are shown below: $\begin{array}{|l|l|} \hline \text { January } 1,2017 & \text { CDN } \$ 1.4415 \ \hline \text { December } 31,2017 & \text { CDN } \$ 1.4325 \ \hline \text { December } 31,2018 & \text { CDN } \$ 1.4575 \ \hline \text { December } 31,2019 & \text { CDN } \$ 1.4435 \ \hline \text { December } 31,2020 & \text { CDN } \$ 1.4525 \ \hline \end{array}$ Assume that the average annual exchange rate was equal to the December 31^st spot rates. Prepare the journal entries for 2017.

Prairie Dog Inc Assume That the Average Annual Exchange Rate Was Equal to an Annual