On 1 July 2015 Jarrets Plc Borrows £500 000 from a British

On 1 July 2015 Jarrets Plc borrows £500 000 from a British bank at an interest rate of 8 per cent,repayable in pounds sterling (£) and with interest due on 30 June each year.The term of the loan is 3 years.On the same date Fitners Plc borrows €1 million from a European bank at an interest rate of 10 per cent.The term of the loan is 3 years.Jarrets and Fitners decide to swap their interest and principal obligations on 1 July 2015.Exchange rate information is as follows:
1 July 2015 €1.00 = £0.50
30 June 2016 €1.00 = £0.55
Both Jarrets and Fitners are Dutch companies.What are the journal entries to record the swap for the period ended 30 June 2016 in Fitners Plc's books (rounded to the nearest whole euro) ?

A) $1 \text { July } 2015$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Cash } & 1000000 & \\\hline \mathrm{Cr} & \text { Foreign loan } & & 1000000 \\\hline\\\hline \mathrm{Dr} & \text { Foreign currency receivable } & 1000000 & \\\hline \mathrm{Cr} & \text { Australian loan } & & 1000000\\\hline\end{array}$

$30 \text { June } 2016$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Foreign loan } & 90909 & \\\hline \mathrm{Cr} & \text { Foreign exchange gain } & & 90909 \\\hline & & & \\\hline \mathrm{Dr} & \text { Foreign exchange loss } & 90909 & \\\hline \mathrm{Cr} & \text { Foreign currency receivable } & & 90909 \\\hline\\\hline \mathrm{Dr} & \text { Interest expense } & 72727 & \\\hline \mathrm{Cr} & \text { Cash } & & 72727 \\\hline & & \\\hline \mathrm{Dr} & \text { Interest expense } & 27273 & \\\hline \mathrm{Cr} & \text { Cash } & & 27273 \\\hline\end{array}$
B) $1 \text { July } 2015$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Cash } & 1000000 & \\\hline \mathrm{Cr} & \text { Loan } & & 1000000 \\\hline & & \\\hline \mathrm{Dr} & \text { Loan receivable } & 1000000 & \\\hline \mathrm{Cr} & \text { Foreign currency payable } & & 1000000 \\\hline\end{array}$

$30 \text { June } 2016$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Foreign currency payable } & 90909 & \\\hline \mathrm{Cr} & \text { Foreign exchange gain } & & 90909\\\hline\\\hline \mathrm{Dr} & \text { Interest expense } & 100000 & \\\hline \mathrm{Cr} & \text { Cash } & & 100000 \\\hline\\\hline \mathrm{Dr} & \text { Cash } & 27273 & \\\hline \mathrm{Cr} & \text { Interest expense } & & 27273 \\\hline\end{array}$
C) $1 \text { July } 2015$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Cash } & 1000000 & \\\hline \mathrm{Cr} & \text { Loan } & & 1000000 \\\hline & & \\\hline \mathrm{Dr} & \text { Loan receivable } & 250000 & \\\hline \mathrm{Cr} & \text { Foreign currency payable } & & 250000 \\\hline\end{array}$

$30 \text { June } 2016$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Foreign exchange loss } & 25000 & \\\hline \mathrm{Cr} & \text { Foreign currency payable } & & 25000 \\\hline & & & \\\hline \mathrm{Dr} & \text { Cash } & 27273 & \\\hline \mathrm{Cr} & \text { Interest expense } & & 27273 \\\hline\end{array}$
D) $1 \text { Julv } 2015$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Cash } & 1000000 & \\\hline \mathrm{Cr} & \text { Loan } & & 1000000 \\\hline& & \\\hline \mathrm{Dr} & \text { Loan receivable } & 1000000 & \\\hline \mathrm{Cr} & \text { Foreign currency payable } & & 1000000 \\\hline\end{array}$

$30 \text { June } 2016$
$\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Foreign currency payable } & 90909 & \\\hline \mathrm{Cr} & \text { Foreign exchange gain } & & 90909 \\\hline & & & \\\hline \mathrm{Dr} & \text { Foreign exchange loss } & & 90909 \\\hline \mathrm{Cr} & \text { Loan receivable } & & \\\hline & & 100000 & \\\hline \mathrm{Dr} & \text { Interest expense } & & 100000 \\\hline \mathrm{Cr} & \text { Cash } & & \\\hline & & 27273 & \\\hline \mathrm{Dr} & \text { Cash } & & 27273 \\\hline \mathrm{Cr} & \text { Interest expense } & & \\\hline\end{array}$

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