Question: On January 1, 20X1, Kiner Company formed
On January 1, 20X1, Kiner Company formed a foreign subsidiary that issued all of its currently outstanding common stock on that date. Selected accounts from the balance sheets, all of which are shown in local currency units, are as follows: 
Additional Information: Exchange rates are as follows: 
An analysis of the accounts receivable balance is as follows: 
An analysis of inventories, for which the first-in, first-out inventory method is used, follows: 
On January 1, 20X1, Kiner’s foreign subsidiary purchased land for 24,000 LCU and plant and equipment for 140,000 LCU. On July 4, 20X2, additional equipment was purchased for 30,000 LCU. Plant and equipment is being depreciated on a straight-line basis over a 10-year period with no residual value. A full year’s depreciation is taken in the year of purchase. On January 15, 20X1, 7 percent bonds with a face value of 120,000 LCU were issued. These bonds mature on January 15, 20X7, and the interest is paid semiannually on July 15 and January 15. The first interest payment was made on July 15, 20X1. Required: Prepare a schedule remeasuring the selected accounts into U.S. dollars for December 31, 20X1, and December 31, 20X2, respectively, assuming the U.S. dollar is the functional currency for the foreign subsidiary. The schedule should be prepared using the following form: 
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December 31 20X2 20X1 Accounts Receivable (net of allowance for uncollectible accounts of 2,200 LCU on December 31, 20X2, and 2,000 LCU on December 31, 20X1) Inventories, at cost LCU 40,000 80,000 LCU 35,000 75,000 (continued) December 31 20X2 20X1 Property, Plant & Equipment (net of allowance for accumulated depreciation of 31,000 LCU on December 31, 20X2, and 14,000 LCU on December 31, 20X1) Long-Term Debt Common Stock, authorized 10,000 shares, par value 10 LCU per share; issued and outstanding, 5,000 shares on December 31, 20X2, and December 31, 20X1 163,000 100,000 150,000 120,000 50,000 50,000 LCU $ January 1, 20X1-July 31, 20X1 August 1, 20X1-0ctober 31, 20X1 November 1, 20X1-June 30, 20X2 July 1, 20X2–December 31, 20X2 Average monthly rate for 20X1 Average monthly rate for 20X2 2.0 = 1 1.8 = 1 1.7 = 1 1.5 - 1 %3D 1.9 = 1 1.6 - 1 20X2 20X1 Accounts Receivable: LCU 37,000 Balance at beginning of year Sales (36,000 LCU per month in 20X2 and 31,000 LCU per month in 20X1) Collections Write-offs (May 20X2 and December 20X1) Balance at end of year 432,000 (423,600) (3,200) LCU 42,200 LCU 372,000 (334,000) (1,000) LCU 37,000 20X2 20X1 Allowance for Uncollectible Accounts: Balance at beginning of year LCU 2,000 З400 (3,200) LCU 2,200 LCU 3,000 (1,000) LCU 2,000 Provision for uncollectible accounts Write-offs (May 20X2 and December 20X1) Balance at end of year 20X2 20X1 LCU 75,000 335,000 LCU410,000 (80,000) LCU330,000 Inventory at beginning of year Purchases (June 20x2 and June 20X1) LCU375,000 LCU375,000 (75,000) LCU300,000 Goods available for sale Inventory at end of year Cost of goods sold Appropriate Balance in LCU Exchange Rate Remeasured into Item U.S. Dollars December 31, 20X1: Accounts Receivable (net) Inventories Property, Plant & Equipment (net) Long-Term Debt Common Stock December 31, 20X2: Accounts Receivable (net) Inventories Property, Plant & Equipment (net) Long-Term Debt Common Stock
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