Answered: Cost of goods sold.... Beginning…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2017:
The average exchange rate during 2017 was $1.00 = LCU 1. The beginning inventory was acquired when the exchange rate was $0.80 = LCU 1. Ending inventory was acquired when the exchange rate was $1.10 = LCU 1. The exchange rate at December 31, 2017, was $1.15 = LCU 1. Assuming that the foreign country is highly inflationary, at what amount should the foreign subsidiary’s cost of goods sold be reflected in the U.S. dollar income statement?
a. $4,440,000.
b. $4,840,000.
c. $5,000,000.
d. $5,750,000.

Cost of goods sold....
Beginning inventory .
Ending inventory..
LCU 5,000,000
500,000
600,000

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