Direction. Read the case and solve using the relevant concepts of accounting. Show your solution(s).

Sconish Ltd., a U.S. company, is a subsidiary of Scothbrite, Inc. Scothbrite, Inc. is a Scottish company. It presented data related to the cost of goods sold for the year ended December 31, 2019.

Inventory, 1/1/19			100,000
Purchases			900,000
Cost of Goods Available for sale			1,000,000
Inventory, 12/31/19			200,000
Exchange rates/
December 31, 2018	$0.56
December 31, 2019	$0.52
2019 average	$0.55

Using temporal method, determine what appropriate exchange rates to calculate the cost of goods sold amount that should be used in the preparation of the Consolidated Income Statement of Sconish Ltd.

Marking Scheme:

Correct Cost of Goods computation = 5 marks

Correct exchange rate used = 5 marks

Total Marks = 10 marks

Use this format in answering this problem

		Exchange rates/	$
Inventory, 1/1/19	100,000
Purchases	900,000
Cost of Goods Available for sale	1,000,000
Inventory, 12/31/19	200,000
Cost of Goods Sold	800,000