Question

Newberry, Inc., whose reporting currency is the U.S. dollar ($), has a subsidiary in Argentina, whose functional currency also is the $. The subsidiary acquires inventory on credit on November 1, 2017, for 110,000 pesos that is sold on January 17, 2018, for 125,000 pesos. The subsidiary pays for the inventory on January 31, 2018. Currency exchange rates are as follows:

November 1, 2017	$	0.22	=	1	peso
December 31, 2017		0.23	=	1
January 17, 2018		0.24	=	1
January 31, 2018		0.25	=	1

What amount does Newberry’s consolidated income statement report for cost of goods sold for the year ending December 31, 2018?

• $24,200.

• $25,300.

• $27,500.

• $26,400.

Answer 1

Answer:

Amount of Cost of Goods Sold for the Year          = InVentory Acquired on Credit on Nov. 2017 x Exchange rate for Nov. 2017          =        110,000 pesos x $ 0.22          =       $ 24,200

amount that Newberry’s consolidated income statement report for cost of goods sold for the year ending December 31, 2018    = $ 24,200

Option (a) is Correct $ 24,200