Question

I currently want to figure out the dollar value for cost goods sold in this question. Also have included the answers for the previous questions to give more context.

Incorrect 0/1pts Question 4 At the end of 2019, Little Co has the following partial trial balance: Account Euros Cash 10,000 Inventory 20,000 400,000 PPE Accum. Dep 100,000 Accounts payable 5,000 Common Stock 100,000 Retained Earnings 200,000 Sales 300,000 Cost of goods sold 80,000 Depreciation expense 30,000 Other expenses 160,000 Exchange rates: 1/1/19: $1.10 per Euro 12/31/19: $1.30 per Euro 2019 average: $1.20 per Euro All of Little's PPE was owned by them on 1/1/19 Beginning inventory was 10,000 Euros Ending inventory was acquired when the exchange rate was $1.25 per Euro. Purchases of 90,000 Euros were made evenly throughout the year. What would be the dollar value for cost of goods sold? (xx,xxx, use comma but no dollar sign)

Answer 1

Single exchange rate cannot be used to directly translate Cost of goods sold in Foreign currency (Euro) into COGS in Local currency (dollars).

Statement showing Cost of Goods Sold in Local Currency ($)

Particulars	Amount in FC (Euro)	Exchange rate as on (1Euro = $)	Calculations	Amount in Local Currency ($)
	a	b	c = a x b
Opening Inventory	EUR 10,000	Exchange Rate as on 01/01/2019 = $1.10	( 10000 x $1.10)	$11,000
Add:- Purchase	EUR 90,000	Average for the year 2019 = $1.20	( 90000 x $1.20)	$108,000
Less:- Closing Inventory	(EUR 20,000)	Purchased when exchange rate was $1.25 per Euro	( 20000 x $1.25)	($25,000)
Cost of goods sold	EUR 80,000			$94,000

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Therefore, Cost of goods Sold in( $) terms is $94000.