Acme Corporation (a U.S. company located in Sarasota, Florida) has the following

Question

Acme Corporation (a U.S. company located in Sarasota, Florida) has the following import/export transactions in 2011:
March 1
Bought inventory costing 50,000 pesos on credit.
May 1

Sold 60 percent of the inventory for 45,000 pesos on credit.
August 1

Collected 40,000 pesos from customers.
September 1

Paid 30,000 pesos to creditors.

Currency exchange rates for 1 peso for 2011 are as follows:
March 1$0.17
May 1
0.18
August 1
0.19
September 1
0.20
December 31
0.21
Assume that all receipts were converted into dollars as soon as they were received.
For each of the following accounts, how much will Acme report on its 2011 financial statements?

Inventory
COGS
Sales
AR
AP
Cash

Thanks!

Explanation / Answer

Inventory as December 31= Purchase- Cost of Goods Sold = 50000-30000=20000 pesos

Cost of Goods Sold= 60% of Inventory= 60% * 50000

In US $ it will be 20000*.21= $4200 (Currency conversion as on December 31) Hence the Inventory is $4,200

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b. Cost of Goods Sold: March 1

  Cost of Goods Sold Cost of Goods Sold= 60% of Inventory= 60% * 50000

Thus in US$= 30000*.17= $5100 (Currency conversion as on March1) the Hence Cost of Goods Sold is $5,100

=======================

c. Sales: May 1

the Sales 45000 pesos

Thus the sales in US$= 45000*.18= $8100 (Currency conversion as on May1) Current rate method Hence the Sales are $8100

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d.

Account Receivables Collected 40000 pesos from receivables, thus the remaining is accounts receivables as on December 31.

This is 45000-40000= 5000 pesos,

In US $ it will be 5000*.21= $1050 (Currency conversion as on December 31) Hence the Account Receivables is $1,050

=========

e. Accounts Payable

  Accounts Payable Paid 30000 pesos to creditors, thus the remaining is accounts payables as on December 31.

This is 50000-30000= 20000 pesos, In US $ it will be 20000*.21= $4200 (Currency conversion as on December 31) Hence the Accounts payable is $4,200

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f. Cash Amount received Amount Paid= 40000-30000- 10000 Pesos

In US $ it will be 10000*.21= $2100 (Currency conversion as on December 31) Hence the Cash is $2,100

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