Shopwell is a U.K. grocery chain that is a subsidiary of Premium Products, a U.S. company. Premium’s fiscal year ends January 31. On February 1, 2015, Shopwell’s inventory balance consisted of £100,000 purchased when the ex-change rate was $1.60/£, and £300,000 purchased when the exchange rate was $1.62/£. Shopwell made purchases of £5,000,000 evenly throughout fiscal 2016, and its inventory on January 31, 2016, consisted of £350,000 purchased when the exchange rate was $1.67/£. Shopwell’s sales of inventory occurred relatively evenly throughout fiscal 2016. The average exchange rate for fiscal 2016 was $1.64/£, and the January 31, 2016, exchange rate was $1.70/£.

Required:

a. Assume that Shopwell’s functional currency is the pound. Calculate Shopwell’s translated ending inventory at January 31, 2016, and its translated cost of sales for fiscal 2016.

b. Now assume that Shopwell’s functional currency is the U.S. dollar. Calculate Shopwell’s remeasured ending inventory at January 31, 2016, and its remeasured cost of sales for fiscal 2016

Answer rating: 100% (QA)

a Translated En... View the full answer