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foreign currency translation refer to the information in problem p12 29 for kiner co 733735

Foreign Currency Translation

Refer to the information in Problem P12 29 for Kiner Company and its foreign subsidiary.

Required

Prepare a schedule translating the selected accounts into U.S. dollars as of December 31, 20X1, and December 31, 20X2, respectively, assuming that the local currency unit is the foreign subsidiary’s functional currency.

P12 29:

Additional Information

1. Exchange rates are as follows:

LCU $

January 1, 20X1–July 31, 20X1

2.0 = 1

August 1, 20X1–October 31, 20X1

1.8 = 1

November 1, 20X1–June 30, 20X2

1.7 = 1

July 1, 20X2–December 31, 20X2

1.5 = 1

Average monthly rate for 20X1

1.9 = 1

Average monthly rate for 20X2

1.6 = 1

2. An analysis of the accounts receivable balance is as follows:

20X2

20X1

Accounts Receivable:

Balance at beginning of year

LCU 37,000

Sales (36,000 LCU per month in 20X2 and 31,000 LCU

per month in 20X1)

432,000

LCU 372,000

Collections

(423,600)

(334,000)

Write offs (May 20X2 and December 20X1)Balance at end of year

(3,200)LCU 42,200

(1,000) LCU 37,000

20X2

20X1

Allowance for Uncollectible Accounts:

Balance at beginning of year

LCU 2,000

Provision for uncollectible accounts

3,400

LCU 3,000

Write offs (May 20X2 and December 20X1)

(3,200)

(1,000)

Balance at end of year

LCU 2,200

LCU 2,000

3. An analysis of inventories, for which the first in, first out inventory method is used, follows:

20X2

20X1

Inventory at beginning of year

LCU 75,000

Purchases (June 20X2 and June 20X1)

335,000

LCU375,000

Goods available for sale

LCU410,000

LCU375,000

Inventory at end of year

(80,000)

(75,000)

Cost of goods sold

LCU330,000

LCU300,000

4. On January 1, 20X1, Kiner’s foreign subsidiary purchased land for 24,000 LCU and plant and equipment for 140,000 LCU. On July 4, 20X2, additional equipment was purchased for 30,000 LCU. Plant and equipment is being depreciated on a straight line basis over a 10 year period with no residual value. A full year’s depreciation is taken in the year of purchase.

5. On January 15, 20X1, 7 percent bonds with a face value of 120,000 LCU were issued. These bonds mature on January 15, 20X7, and the interest is paid semiannually on July 15 and January 15. The first interest payment was made on July 15, 20X1.

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