REFERENCE: 8-05
a Subsidiary of Porter Inc -A USCompany's Foreign Subsidiary Had the Following Amounts in Stickles (§)In

question 77

Multiple Choice

REFERENCE: 8-05
A subsidiary of Porter Inc. ,a U.S.company,was located in a foreign country.The functional currency of this subsidiary was the Stickle (§) which is the local currency where the subsidiary is located.The subsidiary acquired inventory on credit on November 1,2017,for §120,000 that was sold on January 17,2018 for §156,000.The subsidiary paid for the inventory on January 31,2018.Currency exchange rates between the dollar and the Stickle were as follows:
$$\begin{array} { l l } \text { November 1, 2017 } & \$ .19 = \S 1 \\\text { December } 31.2017 & \$ .20 = \S 1 \\\text { January 1. 2018 } & \$ .22 = \S 1 \\\text { January 31. 2018 } & \$ .23 = \S 1 \\\text { Average for 2018 } & \$ .24 = \S 1\end{array}$$
-A U.S.company's foreign subsidiary had the following amounts in stickles (§) in 2018:
$$\begin{array} { l r } \text { Cost of goods sold } & \S 12,000,000 \\\text { Ending inventory } & 600,000 \\\text { Beginning inventory } & 240,000\end{array}$$
The average exchange rate during 2018 was §1 = $.96.The beginning inventory was acquired when the exchange rate was §1 = $1.20.The ending inventory was acquired when the exchange rate was §1 = $.90.The exchange rate at December 31,2018 was §1 = $.84.Assuming that the foreign country had a highly inflationary economy,at what amount should the foreign subsidiary's cost of goods sold have been reflected in the 2018 U.S.dollar income statement?

• A)$11,253,600.
• B)$11,577,600.
• C)$11,649,600.
• D)$11,613,600.
• E)$11,523,600.

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