On 1 January, 2015, Hikers Inc

Multiple Choice

On 1 January, 2015, Hikers Inc., a U.S.-based company, borrowed £200,000 on a two-year note at a per annum interest of 4.5%. The spot rate on this day was $1.65 per pound. The spot rate on 31 December, 2015, was $1.64 per pound. The journal entries to account for this foreign currency borrowing will include:

A) a debit to Cash for $200,000 on January 1, 2015.
B) a credit to Notes Payable for $330,000 on December 31, 2015.
C) a debit to Foreign Exchange Loss for $90 on December 31, 2015.
D) a debit to Interest Expense for $14,760 on December 31, 2015.