In: Accounting
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, 2018, Shopwell’s inventory balance consisted of £100,000 purchased when the exchange rate was $1.20/£, and £300,000 purchased when the exchange rate was $1.23/£. Shopwell made purchases of £5,000,000 evenly throughout fiscal 2019, and its inventory on January 31, 2019, consisted of £350,000 purchased when the exchange rate was $1.29/£. Shopwell’s sales of inventory occurred relatively evenly throughout fiscal 2019. The average exchange rate for fiscal 2019 was $1.26/£, and the January 31, 2019, exchange rate was $1.30/£. | ||||||
Required | ||||||
a. Assume that Shopwell’s functional currency is the pound. Calculate Shopwell’s translated ending inventory at January 31, 2019, and its translated cost of sales for fiscal 2019. | ||||||
b. Now assume that Shopwell’s functional currency is the U.S. dollar. Calculate Shopwell’s remeasured ending inventory at January 31, 2019, and its remeasured cost of sales for fiscal 2019. | ||||||
a. Translated | b. Remeasured | |||||
Ending Inventory | ? | ? | ||||
Cost Of sales | ? | ? |