A Foreign Subsidiary Uses the First-In First-Out Inventory Method

question 46

Multiple Choice

A foreign subsidiary uses the first-in first-out inventory method. The following inventory balances are given at December 31, 2013 in local currency units (LCU) : Compute the December 31, 2013, inventory balance using the lower of cost or market method under the temporal method.

• A)$429,000.
• B)$457,600.
• C)$596,400.
• D)$568,000.
• E)$426,000.

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Definitions:

Subsidiary Ledger

A detailed ledger that contains all the transaction details of a specific account, which is summarized in the general ledger.

Accounts Payable

Liabilities or money owed by a company to its creditors or suppliers for goods and services received but not yet paid for.

General Ledger

A comprehensive record of all financial transactions that occur within a company, organized by account.

Sales Journal

A specialized accounting journal used to record all sales of goods and services on credit.