Problem - A subsidiary of Porter Inc., a U.S. company, was located in a foreign country. The functional currency of this subsidiary was the stickle (§), the local currency where the subsidiary is located. The subsidiary acquired inventory on credit on November 1, 2010, for §120,000 that was sold on January 17, 2011 for §156,000. The subsidiary paid for the inventory on January 31, 2011. Currency exchange rates between the dollar and the stickle were as follows:
November 1, 2010 $.19 = 1 stickle
December 31, 2010 $.20 = 1 stickle
January 1, 2011 $.22 = 1 stickle
January 31, 2011 $.23 = 1 stickle
Average for 2011 $.24 = 1 stickle
What amount would have been reported for this inventory in Porter's consolidated balance sheet at December 31, 2010?
a. $22,800
b. $24,000
c. $26,400
d. $28,800
What amount would have been reported for cost of goods sold on Porter's consolidated income statement at December 31, 2011?
a. $22,800
b. $24,000
c. $26,400
d. $28,800