Question
Tidemark Imports has the US dollar as its functional currency. On November 1, 2026 it bought inventory from a French supplier for €50,000, payable on February 15, 2027.
| Date | Exchange rate ($ per €) |
|---|
| November 1, 2026 | 1.10 |
| December 31, 2026 | 1.14 |
| February 15, 2027 | 1.12 |
The inventory was still unsold at December 31, 2026.
Required:
- Journal Entries — the purchase, the year-end retranslation, and the payment. Use Inventory, Accounts Payable, Foreign Exchange Loss, Foreign Exchange Gain and Cash.
- Inventory — the amount at which the unsold inventory is carried at December 31, 2026.
- Statement Impact — the effect of the December 31 retranslation entry.
Statements in this challenge
- Journal EntriesJournal Entry
- InventoryMCQ Quiz
- Statement ImpactStatement Impact
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
How to approach this
IAS 1 — Presentation of Financial Statements
A composite challenge links several statements built from one set of data, so figures flow between them: profit reaches retained earnings, and the closing balances feed the position statement. Complete them in the order the statements depend on each other rather than the order of the tabs.
Common mistakes
- Preparing each statement independently, so the linking figures disagree.
- Carrying a figure forward before finishing the adjustments that change it.
- Reworking a linked figure in one statement without updating it in the others.
Further readingIAS 1: what goes where in a full set of statements