Mills IncHad a Receivable from a Foreign Customer That Is Due

question 62

Multiple Choice

Mills Inc.had a receivable from a foreign customer that is due in the local currency of the customer (stickles) .On December 31, 2018, this receivable for §200,000 was correctly included in Mills' balance sheet at $132,000.When the receivable was collected on February 15, 2019, the U.S.dollar equivalent was $144,000.In Mills' 2019 consolidated income statement, how much should have been reported as a foreign exchange gain?

• A) $ 0.
• B) $36,000.
• C) $48,000.
• D) $10,000.
• E) $12,000.

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Definitions:

Perpetual LIFO

A method of inventory valuation where the last items acquired are the first considered sold in an ongoing, or perpetual, system.

Inventory Flow

The progression of goods through a business, typically from purchase or production to sale, characterized by methods such as FIFO, LIFO, and weighted average.

Average Cost Method

A method of inventory valuation where the cost of goods sold and ending inventory are determined by calculating the weighted average of the costs of all items available for sale.

Year-End Inventory

The total counted value of inventory that a business owns at the end of its fiscal year, which is used to calculate cost of goods sold and profitability.