A U.S. company’s foreign subsidiary had these amounts in local currency units (LCU) in 2017:         Cost of goods sold LCU 5,810,000 Beginning inventory   541,000 Ending inventory   624,000     The average exchange rate during 2017 was $1.40 = LCU 1. The beginning inventory was acquired when the exchange rate was $1.20 = LCU 1. Ending inventory was acquired when the exchange rate was $1.50 = LCU 1. The exchange rate at December 31, 2017, was $1.55 = 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?

Recording Export Transactions Daisy Brands, a U.S. company, sells items abroad. Daisy prices    many of these transactions in the currency of the customer. Following are four such transactions made in    the last accounting period, plus the direct exchange rates for each date:       Country Amount Currency           Spot rate at             sale             Spot rate             at collection             Argentina . . . . . . . . . . . . . . . . . . . . . . 250,000 Peso $0.056 $0.049       Canada . . . . . . . . . . . . . . . . . . . . . . . . 400,000 Dollar 0.732 0.713       India . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Rupee 0.016 0.018       South Africa . . . . . . . . . . . . . . . . . . . . 100,000 Rand 0.074 0.077       Required             Prepare the journal entries made by Daisy Brands to record the above sale and collection transactions

Matthias Corp. had the following foreign currency transactions during 2017:• Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $60,000 and paid the invoice on April 20 at the U.S. dollar equivalent of $50,000.• On September 1, borrowed the U.S. dollar equivalent of $300,000 evidenced by a note that is payable in the lender’s local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $320,000.In Matthias’s 2017 income statement, what amount should be included as a net foreign exchange gain or loss?a. $10,000 gainb. $10,000 lossc. $20,000 gaind. $30,000 loss

Recording Import Transactions Pinnacle Foods imports a variety of items for resale to U.S. retail‑   ers. Following is a description of purchases and foreign‑currency‑denominated payments made in the last    accounting period, plus the direct exchange rates for each date:       Country Amount Currency           Spot rate at             purchase             Spot rate             at payment             Australia . . . . . . . . . . . . . . . . . . 200,000 Australian dollar $0.7600 $0.7300     Thailand . . . . . . . . . . . . . . . . . . 800,000 Baht 0.0345 0.0365       Hong Kong . . . . . . . . . . . . . . . . 5,000,000 Hong Kong dollar 0.1319 0.1362     Jordan . . . . . . . . . . . . . . . . . . . 500,000 Dinar 1.4100 1.3900       Required             Prepare the journal entries made by Pinnacle, a U.S. company, to record the above purchase and payment transaction.

Voltac Corporation (a U.S. company located in Charlotte, North Carolina) has the following import/ export transactions denominated in Mexican pesos in 2017:Currency exchange rates for 1 peso for 2017 are as follows:For each of the following accounts, how much will Voltac report on its 2017 financial statements?a. Inventory.b. Cost of Goods Sold.c. Sales.d. Accounts Receivable.e. Accounts Payable.f. Cash.

Choose the correct.Matthias Corp. had the following foreign currency transactions during 2017:∙ Purchased merchandise from a foreign supplier on January 20 for the U.S. dollar equivalent of $60,000 and paid the invoice on April 20 at the U.S. dollar equivalent of $50,000.∙ On September 1, borrowed the U.S. dollar equivalent of $300,000 evidenced by a note that is payable in the lender’s local currency in one year. On December 31, the U.S. dollar equivalent of the principal amount was $320,000.In Matthias’s 2017 income statement, what amount should be included as a net foreign exchange gain or loss?a. $10,000 gainb. $10,000 lossc. $20,000 gaind. $30,000 loss

Turbo Corporation (a U.S.-based company) acquired merchandise on account from a foreign supplier on November 1, 2017, for 100,000 markkas. It paid the foreign currency account payable on January 17, 2018. The following exchange rates for 1 markka are known:a. How does the fluctuation in exchange rates affect Turbo’s 2017 income statement?b. How does the fluctuation in exchange rates affect Turbo’s 2018 income statement?

On July 1, 2017, Mifflin Company borrowed 200,000 euros from a foreign lender evidenced by an interest-bearing note due on July 1, 2018. The note is denominated in euros. The U.S. dollar equivalent of the note principal is as follows:In its 2018 income statement, what amount should Mifflin include as a foreign exchange gain or loss on the note?a. $15,000 gainb. $15,000 lossc. $10,000 gaind. $10,000 loss

Brandlin company of anaheim, california, sells parts to a foreign customer on december 1, 2017, with payment of 24,000 korunas to be received on march 1, 2018. Brandlin enters into a forward contact on december 1, 2017 to sell 24,000 korunas on march 1, 2018. Relevant exchange rates for the korunas on various dates are as follow: date                                spot rate                 forward rate december 1, 2017           4.20                          4.275 december 31, 2017         4.30                           4.400 march 1, 2018                  4.45                            n/a   brandli's incremental borrowing rate is 12 percent. The present value factor for two months at annual interest rate of 12 percent  (1 percent per month) is 0.9803. Brandlin must close its books and prepare financial statements at december 31. 1. Assuming that brandlin designates the forward contract as a cash flow hedge of a foreign currency receivable and recognizes any premium or discount…