Borrowing Funds Denominated in Foreign Currency Example • Deniz Ltd

Borrowing Funds Denominated in Foreign Currency Example • Deniz Ltd. borrowed 300.000 USD of loan for 9 months from the Bank A on 30.06.2016. The interest rate is 6% per annum, and the company would pay the principal in three installments with the interest calculated quarterly on 30.09.2016, 31.12.2016 and 31.03.2017 according to the agreement. • The spot foreign exchange rates for $/ were 3,20, 3,35, 3,50 and 3,60 on the dates 30 June, 30 Sep, 31 Dec 2016 and 31 March 2017, respectively. Instructions: Calculate the interests, foreign exchange gains/losses and the principal amount paid in TL for each installment. • Make the journal entries including year-end adjusting entries if required.