Answer:
Journal entries
<u>April 1 2020</u>
Cash Account Dr. (518,000 Euros at 1.10) $569,800
Short term loan payable Cr $569,800
<u>Oct 1 2020</u>
Interest expense Account Dr. $15,540
Cash Account (518,000*5%*6/12*1.20) $15,540
<u>Dec 31 2020</u>
Interest expense Account Dr. $8,029
Interest expense Payable (518,000*5%*3/12*1.24) $8,029
<u>Dec 31 2020</u>
Foreign Exchange Loss Dr. (518,000*0.14) $72,520
Short Term loan payable Cr. $72,520
<u>Mar 31 2021</u>
Interest expense Account Dr.(518,000*5%*3/12*1.28) $8,288
Interest expense Payable Account Dr. $8,029
Foreign exchange loss Dr. $259
Cash account Cr. (518,000*5%*6/12*1.28) $16,576
<u>Mar 31 2021</u>
Short term loan payable Account Dr. $683,760
Foreign Exchange loss Dr. (518,000*0.04) $20,720
Cash account Cr. (518,000*1.28) $663,040