Page 189 - DMGT549_INTERNATIONAL_FINANCIAL_MANAGEMENT

International Financial Management

Notes Solution:
Exchange Rates
` 35/$ for P&E, long-term loan, common stock

` 40/$ for inventory March 31st
` 42/$ for April 1st
On using the current rate method

` Exchange Conversion to US $ Exchange Conversion to US $
Rate on Nov 31 rate on April 1
st
st
Cash 6000 40 $150 42 $142.86
Accounts receivable 4500 40 112.50 42 107.14
Inventory 4500 40 112.50 42 107.14
P&E 10000 40 $250.00 42 238.10
Total 25,000 625.00 $595.24
Accounts payable 3500 40 $87.50 42 $83.33
Short-term Loan 1500 40 37.50 42 35.71
Long-term Loan 4000 40 100.00 42 95.24
Capital Stock 10,000 35 285.71 42 285.71
Retained earnings 6,000 35 171.43 35 171.043
CTA – (57.14) (76.19)
Total 25,000 $625.00 $595.24
A/c loss by current rate method is * $ 57.14 on March 31st
* $ 76.19 on April 1st

March 31st April 1st
Exposed assets $ 625.00 $595.24
Exposed liabilities $ 225.00 $499.99
Net exposed $400.00 $95.25
On using monetary/non-monetary method

` Exchange Conversion to US $ Exchange Conversion to US $
Rate on May 31st on April 1st
Cash 6000 40 $150.00 42 $142.86
Accounts receivable 4500 40 112.50 42 107.15
Inventory 4500 35 128.57 35 128.57
P&E 10,000 35 285.71 35 285.71
Total ` 25,000 $676.78 664.29
Accounts payable 3500 40 87.50 42 83.33
Short-term Loan 1500 40 37.50 42 35.721
Long-term Loan 4000 40 100.00 42 95.24
Capital Stock 10,000 35 285.71 35 285.71
Retained earning 6,000 35 171.43 35 171.43
CTA – (5.36) (7.13)
Total ` 25,000 $ 676.78 $ 664.29

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