Rome Enterprises, a Subsidiary of La Italia Company Based in New

question 10

Multiple Choice

Rome Enterprises, a subsidiary of La Italia Company based in New York, reported the following information at the end of its first year of operations (all in euros) : assets--1,320,000; expenses--340,000; liabilities--880,000; capital stock--80,000, revenues--400,000. Relevant exchange rates are as follows:

As a result of the translation process, what amount is recorded on the financial statements as the translation adjustment?

• A) $25,200 debit adjustment
• B) $34,800 debit adjustment
• C) $34,800 credit adjustment
• D) $25,200 credit adjustment

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Definitions:

Uncollectible

Debt or receivables that are considered impossible to collect, potentially due to the debtor's inability to pay.

Budgeted Cash Disbursements

Budgeted cash disbursements are forecasted cash payments during a specific period, part of cash flow planning.

Bad Debts

Accounts receivable that are considered uncollectible and are written off as a loss.

General Operating Expenses

These are the day-to-day expenses necessary for the management and administration of a business, such as rent, utilities, and payroll.