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: K 200,000 100,000 60,000 12,000 22,000 36,000 18,000 5,000 6,000 Sales Inventory (bought on 3/1/20) Equipment (bought on 1/1/19) Rent expense Dividends (declared on 10/1/20) Notes receivable (to be collected in 2023) Accumulated depreciation-equipment Salary payable Depreciation expense The following U.S.S per kuna exchange rates are applicable: January 1, 2019 Average for 2019 January 1, 2020 March 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 $0.19 0.20 0.24 0.25 0.27 0.28 e. 26 Lancer is preparing account balances to produce consolidated financial statements. a. 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? o. 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?

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: K 200,000 100,000 60,000 12,000 22,000 36,000 18,000 5,000 6,000 Sales Inventory (bought on 3/1/20) Equipment (bought on 1/1/19) Rent expense Dividends (declared on 10/1/20) Notes receivable (to be collected in 2023) Accumulated depreciation-equipment Salary payable Depreciation expense The following U.S.S per kuna exchange rates are applicable: January 1, 2019 Average for 2019 January 1, 2020 March 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 $0.19 0.20 0.24 0.25 0.27 0.28 e. 26 Lancer is preparing account balances to produce consolidated financial statements. a. 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? o. 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?

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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1. On November 1, 2020, an entity acquired on account goods from a foreign supplier at a cost of $3,000. The accounts payable are paid on January 30, 2021. On December 1, 2020, an entity sold on account goods to a foreign customer at a selling price of $2,500. The accounts receivable is collected on February 28, 2021. The entity is operating in Philippine economy wherein the functional currency is the Philippine Peso. The following exchange rates are provided Buying spot rate Selling spot rate November 1, 2020 P40 P42 December 1, 2020 39 40 December 31, 45 45.5 2020 January 30, 2021 45.5 46 February 28, 2021 46 46.5 What is the carrying amount of monetary asset on December 31, 2020?
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in Croatia on January 1, 2019. The following account balances for the year ending December 31, 2020, are stated in kuna (K), the local currency: Sales K 330,000 Inventory (bought on 3/1/20) 181,500 Equipment (bought on 1/1/19) 86,000 Rent expense 22,000 Dividends (declared on 10/1/20) 28,000 Notes receivable (to be collected in 2023) 49,000 Accumulated depreciation—equipment 25,800 Salary payable 7,600 Depreciation expense 8,600 The following U.S.$ per kuna exchange rates are applicable: January 1, 2019 $0.32 Average for 2019 0.33 January 1, 2020 0.37 March 1, 2020 0.38 October 1, 2020 0.40 December 31, 2020 0.41 Average for 2020 0.39 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…
pennymarkets corp, a US firm, acquired Supervalu, on January 1, 2019. Supervalu is a swedish company that has been in existence for several years, and whose functional currency is the US dollar. Compartiive account balances for January 1 and December 31, 2019, appear below, measured in Krona (kr), the swedish currency. Account balance 12/31/2019 1/1/2019 Cash kr 240,000 kr 175,000 Accounts receivable, net 360,000 400,000 Plant and Equipment, net 2,000,000 2,320,000 Account payable (200,000) (535,000) Notes payable (600,000) (800,000) Capital stock (400,000) (400,000) Retained Earnings, Jan 1 (1,160,000) (1,160,000) Sales (1,200,000) Depreciation Expense 320,000 Other Expense 640,000 Totals 0 0 $/kr Exchange Rates: January 1, 2019 0.13 Average for 2019 0.14 December 31, 2019 0.16 Translate Supervalu's 2019 ending trial balance into US dollars. Include a schedule calculating the 2019…
ASSUME THAT THE LOCAL CURRENCY UNIT IS THE FUNCTIONAL CURRENCY. Cade Inc. had a debit adjustment of $6400 for the year ended December 31, 2019, from restating its foreign subsidiary's accounts from their local currency units into U.S. dollars. Additionally, Cade had a receivable from a foreign customer. It is denominated in the customer's local currency. On December 31, 2018, this receivable for 300,000 local currency units (LCU) was correctly included in Cade's balance sheet at $121000. When the receivable was collected on February 15, 2019, the U.S. dollar-equivalent was $123800. In Cade's 2019 consolidated statement of income, how much should be reported as foreign exchange gain/(loss) in computing net income? BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF $1,000. IF THE NUMBER IS NEGATIVE, TYPE -1000 INSTEAD OF ($1,000) Your Answer:
Problem 1: On November 1, 2020, an entity acquired on account goods from foreign supplier at a cost of 1,000 USD. The accounts payable are paid on January 30, 2021. On December 1, 2020, an entity sold on account the said goods to a foreign customer at a selling price of 1,500 USD. The accounts receivable is collected on February 28, 2021. The entity is operating in Philippine economy wherein the functional currency is the Philippine Peso. The following direct exchange rates are provided: 12/1/20 12/21/20 1/30/21 11/1/20 2/28/21 Buy Sell 40 39 45 43 42 42 40 47 46 45 What is the sales revenue to be reported by the entity for the year ended December 31, 2020? b. What is the cost of sales to be reported by the entity for the year ended December 31, 2020? What is the book value of accounts receivable on December 31, 2020? d. What is the book value of accounts payable on December 31, 2020? What is the net foreign currency gain or loss for the year ended December 31, 2020? а. С. е.
4) Brief, Inc., had a receivable from a foreign customer that is payable in the customer’s local currency. On December 31, 2020, Brief correctly included this receivable for 200,000 local currency units (LCU) in its balance sheet at $110,000. When Brief collected the receivable on February 15, 2021, the U.S. dollar equivalent was $120,000. In Brief’s 2021 consolidated income statement, how much should it report as a foreign exchange gain? a) $–0– b)$10,000 c) $15,000 d) $25,000
Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s): Cash Inventory Land Building Accumulated depreciation 2011 2013 August 1, 2019 December 31, 2019 February 1, 2020 May 1, 2020 June 1, 2020 August 1, 2020 September 1, 2020 NGN 16,790 Notes payable Common stock Retained. 11,900 earnings The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: October 1, 2020 November 1, 2020 December 1, 2020 December 31, 2020 Average for 2020 4,190 41,900 (20,950) NGN 53,830 2020 Feb. 1 Paid 8,190,000 NGN on the note payable. May 1 Sold entire inventory for 17,900,000 NGN on account. June 1 Sold land for 6,190,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,190,000 NGN…
ASSUME THAT THE U.S. DOLLAR IS THE FUNCTIONAL CURRENCY. Ruthie Inc. had a debit adjustment of $7900 for the year ended December 31, 2019, from restating its foreign subsidiary's accounts from their local currency units into U.S. dollars. Additionally, Ruthie had a receivable from a foreign customer. It is denominated in the customer's local currency. On December 31, 2018, this receivable for 300,000 local currency units (LCU) was correctly included in Ruthie's balance sheet at $124200. When the receivable was collected on February 15, 2019, the U.S. dollar-equivalent was $122200. In Ruthie's 2019 consolidated statement of income, how much should be reported as foreign exchange gain/(loss) in computing net income? BE SURE TO TYPE A SIMPLE NUMBER WITH NO COMMAS OR DOLLAR SIGNS. FOR EXAMPLE, TYPE 1000 INSTEAD OF $1,000. IF THE NUMBER IS NEGATIVE, TYPE -1000 INSTEAD OF ($1,000) Your Answer:
Brief, Inc., had a receivable from a foreign customer that is payable in the customer's local currency. On December 31, 2020, Brief correctly included this receivable for 377,500 local currency units (LCU) in its balance sheet at $290,000. When Brief collected the receivable on February 15, 2021, the U.S. dollar equivalent was $301,200. In Brief's 2021 consolidated income statement, how much should it report as a foreign exchange gain? Multiple Choice $16,200 $27,400 $0 $11,200
Rolfe Company (a U.S.-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s]): Cash Inventory Land Building Accumulated depreciation NGN 15,670 10,300 4,030 40,300 (20,150) NGN 50,150 Notes payable Common stock Retained earnings 2020 Feb. 1 Paid 8,030,000 NGN on the note payable. May 1 Sold entire inventory for 16,300,000 NGN on account. June 1 Sold land for 6,030,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,030,000 NGN cash. Oct. 1 Bought inventory for 20,030,000 NGN cash. Nov. 1 Bought land for 3,030,000 NGN on account. NGN 20,060 20,060 10,030 The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place: Dec. 1 Declared and paid 3,030,000 NGN cash dividend to parent. Dec.31…
Max Ltd sells equipment to Star Ltd, a U.S. company on 30/01/2020 for US$250,000. Goods are invoiced in US dollars. Payment is made on 5/03/2020. The company also buys parts from the USA, also invoiced in US$, value US$187,500 on 20/4/2020. The functional currency of Max Ltd is AUD$. As at 30/06/2020, this debt unpaid. Rates: 30/01 – A$1 = US$0.93 5/03 – A$1 = US$0.92 20/4 – A$1 = US$0.94 30/6 – A$1 = US$0.91 Required: SHOW YOUR WORKINGS Prepare journal entries for the above transactions. (Round answers to the nearest dollar, e.g. $200,263.57 = $200,264).
3. On April 8, 2021, Company R purchased merchandise from an unaffiliated company for 10,000 units of the foreign company's local currency. Company R paid the bill in full on March 1, 2022 when the spot rate was $0.45. The spot rate was $0.60 on April 8, 2021, and was $0.55 on December 31, 2021. For the year ended December 31, 2022, how much gain should be reported by Company R? $1,500 $1,000 $500 O $0