On October 31, 2010, Darling Company Negotiated a Two-Year 100,000

Essay

On October 31, 2010, 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, 2012. 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: $\begin{array}{|l|c|}\hline & \text { Franc Rate } \\\hline \text { October 31,2010 } & \$ 0.50 \\\hline \text { December } 31,2010 & \$ 0.52 \\\hline \text { October } 31,2011 & \$ 0.60 \\\hline \text { December } 31,2011 & \$ 0.62 \\\hline \text { October } 31,2012 & \$ 0.75 \\\hline\end{array}$