Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency: Sales K 210,000 Inventory (bought on 3/1/20) 105,000 Equipment (bought on 1/1/19) 62,000 Rent expense 14,000 Dividends (declared on 10/1/20) 22,000 Notes receivable (to be collected in 2023) 37,000 Accumulated depreciation—equipment 18,600 Salary payable 5,200 Depreciation expense 6,200 The following U.S.$ per kuna exchange rates are applicable: January 1, 2019 $0.20 Average for 2019 0.21 January 1, 2020 0.25 March 1, 2020 0.26 October 1, 2020 0.28 December 31, 2020 0.29 Average for 2020 0.27 Lancer is preparing account balances to produce consolidated financial statements. Assuming that the kuna is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements? Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements? (For all requirements, round your answers to 2 decimal places.)

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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Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency:


Sales	K	210,000
Inventory (bought on 3/1/20)		105,000
Equipment (bought on 1/1/19)		62,000
Rent expense		14,000
Dividends (declared on 10/1/20)		22,000
Notes receivable (to be collected in 2023)		37,000
Accumulated depreciation—equipment		18,600
Salary payable		5,200
Depreciation expense		6,200

The following U.S.$ per kuna exchange rates are applicable:


January 1, 2019	$0.20
Average for 2019	0.21
January 1, 2020	0.25
March 1, 2020	0.26
October 1, 2020	0.28
December 31, 2020	0.29
Average for 2020	0.27

Lancer is preparing account balances to produce consolidated financial statements.

Assuming that the kuna is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?
Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?

(For all requirements, round your answers to 2 decimal places.)

a. Sales
b.
Account
Inventory
Equipment
Rent expense
Dividends
Notes receivable
Accumulated depreciation-equipment
Salary payable
Depreciation expense
Sales
Inventory
Equipment
Rent expense
Dividends
Notes receivable
Accumulated depreciation-equipment
Salary payable
Depreciation expense
Exchange Rate

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