Foreign Currency Translation & Foreign Branch Tutorial Sheet

Foreign Currency Translation & Foreign Branch Tutorial Sheet

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Unformatted text preview: TUTORIAL SHEET # 2 FOREIGN CURRENCY TRANSLATION AND FOREIGN BRANCH Question # 1 Trial balance of Scotia branch located in Jamaica at 31 December 2001 DR CR $ $ Head Office Current account 92,400 Remittances 36,000 Buildings at cost 96,000 Provision for depreciation on buildings 31 Dec. 2000 24,000 Inventory at 31 December 2000 21,000 Trade Receivables 1,200 Bank 6,000 Trade Payables 4,800 Sales 168,000 Goods from head office 72,400 Purchases 38,600 Administration expenses 10,000 Selling expenses 8,000-------------------- 289,200 289,200 ====== ====== Notes: 1. Depreciation on buildings is to be provided for at 5% per annum on cost. 2. Administration costs of $2,000 were outstanding at 31 December 2001 3. Selling costs of $500 had been prepaid at 31 December 2001 4. The balance on the branch current account stood at 24,000 in the head office books on 31 Dec, 2001. 5. There were no goods or cash in transit at 31 December 2001 6. Remittances were made as follows: 1 July 2001 $20,000 1 October 2001 $16,000 7. Rates of exchange were as follows: At date of acquisition of the buildings $6 = 1 At 31 Dec 2000 $3 = 1 At 1 July 2001 $4 = 1 At 1 Oct 2001 $2 = 1 At 31 Dec 2001 $2.5 = 1 Average for the year $3 = 1 8. At 31December 2001 inventory stood at $12,000. 9. Fixed rate used by branch for converting the value of goods received from head office $3.85 = 1 Required: a) Prepare a trial balance of the branch as at 31 December 2001 translated using the presentation currency method. b) Branch Income Statement for year ended 31 December 2001 and Balance Sheet as at that date. 1 Question # 2 An enterprise has a branch in Bungholand, the unit of currency of which is the Bung. The branchs trial balance at 31 December 2002 is as follows: DR CR B B Fixtures and fittings: Bought 1 January 36,000 Bought 1 July 26,000 Inventory 1 January 15,000 Goods from head office 9,680 Purchases 87,120 Trade Receivables 9,216 Bank 3,828 Expenses 14,500 Sales 120,886 Trade Payables 3,968 Head office current account 76,490------------------- 201,344 201,344 ====== ====== The following further information is given: i) All fixtures and fittings were bought during the current year: B36,000 on 1 January when B40 = $1 B26,000 on 1 July when B52 = $1 ii) Depreciation is calculated at the rate on 10% pa on a time basis iii) Rates of exchange December 31, 2002 B64 = $1 Average B52 = $1 iv) Some inventory was bought at $1 per article from head office. 186 articles had been received during the year. v) At 31 December 2002 inventory amounted to B44,286 vi) The balance on the branch account in head office books stood at $1,800 on 31 December, 2002, but goods were in transit amounting to $200 at cost price....
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Foreign Currency Translation & Foreign Branch Tutorial Sheet

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