Question

Hawk Company sold inventory to United Ltd., an English subsidiary. The goods cost Hawk $8,000 and were sold to United for $12,000 on November 27, payable in British pounds. The goods are still on hand at the end of the year on December 31. The British pound (£) is the functional currency of the English subsidiary. The exchange rates follow:
€ $
November 27 ....... 1 = 1.60
December 31...... 1 = 1.70

Required
a. At what dollar amount is the ending inventory shown in the trial balance of the consolidated worksheet?
b. What amount is eliminated for the unrealized intercompany gross profit, and at what amount is the inventory shown on the consolidated balance sheet?



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  • CreatedMay 23, 2014
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