Need someone to do my class, BUS-FP4063, Accounting

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Exercise 1

Assessment 3: Foreign Currency
Exercise 1 Worksheet: Foreign Currency Borrowing
On September 30, 2015, Dolphin Incorporated negotiated a 1,000,000 euro, two-year loan from a German bank. The annual interest on the loan is 2%. Dolphin makes annual interest payments on September 30. Dolphin will repay the loan principal on September 30, 2017. Dolphin prepares December 31 year-end financial statements in U.S. dollars.
Step 1:
Prepare the journal entries in Table 1 below for this foreign currency borrowing, based on the following exchange rates for one euro: • September 30, 2015 . . . . . . . . . . . . . . . . $0.110 • December 31, 2015 . . . . . . . . . . . . . . . . $0.115 • September 30, 2016 . . . . . . . . . . . . . . . . $0.130 • December 31, 2016 . . . . . . . . . . . . . . . . $0.135 • September 30, 2017 . . . . . . . . . . . . . . . . $0.160
Table 1: Journal Entries
Date Account Credit Debit
Step 2:
Determine the effective cost (in U.S. dollars) of borrowing in 2015, 2016, and 2017. Use Table 2 below as a worksheet.
Table 2: Effective Cost of Borrowing
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End of Worksheet

Exercise 2

Assessment 3: Foreign Currency
Exercise 2 Worksheet: Financial Statement Translation
On January 1, 2015, Broadmore Incorporated began operating a subsidiary company in Denmark by purchasing all of the subsidiary’s common stock for a fair value of 80,000 krones. The subsidiary immediately borrowed 200,000 krones on a five-year, 10% note. Interest on the note is payable yearly on January 1, starting in 2016. The subsidiary then paid 280,000 krones to purchase a building that had an anticipated life of 10 years, with no salvage value. The straight-line method will be used to depreciate the building. The subsidiary rented the building for three years at 10,000 krones per month. By the end of the year, the subsidiary had received payments totaling 100,000 krones. On October 1, 8,000 krones were paid for a building repair completed on the same date. On December 31, 2015, the subsidiary transferred a cash dividend of 10,000 krones to Broadmore. The subsidiary’s functional currency is the krone. The currency exchange rates for one krone are shown below: • January 1, 2015 . . . . . . . . . . . . . . . . $2.00 = 1 krone • October 1, 2015 . . . . . . . . . . . . . . . . $1.85 = 1 krone • Average for 2015. . . . . . . . . . . . . . . .. $1.90 = 1 krone • December 31, 2015 . . . . . . . . . . . . . .$1.80 = 1 krone Prepare, in krones, an income statement (Table 1), a statement of retained earnings (Table 2), and a balance sheet (Table 3) for the subsidiary. Translate all amounts into U.S. dollars. The first item has been completed for you as an example.
Broadmore Company Subsidiary
Table 1: Income Statement
Account Krone Conversion US Dollars
Rent revenue $ 120,000 x $1.90 A = $ 228,000
Interest expense
Depreciation expense
Repair expense
Net income
Table 2: Statement of Retained Earnings
Account Krone Conversion U.S. Dollars
Retained earnings, 1/1 $ - $ -
Net income
Dividends paid
Retained earnings, 12/31
Table 3: Balance Sheet
Account Krone Conversion U.S. Dollars
Cash
Accounts receivable
Building
Accumulated depreciation
Total assets
Interest payable
Note payable
Common stock
Retained earnings
Translation adjustment
Total liabilities and equities
Computation of Translation Adjustment
Beginning net assets
Increase in net assets:
Issued common stock
Net income
Decrease in net assets:
Dividends paid
Ending net assets
Ending net assets at current exchange rate
Translation adjustment (negative)
End of Worksheet