Chapter 10-16 - CHAPTER 10 TRANSLATION OF FOREIGN CURRENCY...

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CHAPTER 10 TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS Answers to Problems 35. (90 minutes) (Translate foreign currency financial statements and prepare consolidation worksheet) Step One Simbel's financial statements are first translated into U.S. dollars after reclassification of the 10,000 pound expenditure for rent from rent expense to prepaid rent. Credit balances are in parentheses. Translation Worksheet Exchange Account Pounds Rate Dollars Sales (800,000) 0.274(219,200) Cost of goods sold 420,000 0.274 115,080 Salary expense 74,000 0.274 20,276 Rent expense (adjusted) 36,000 0.274 9,864 Other expenses 59,000 0.274 16,166 Gain on sale of fixed assets, 10/1/08 (30,000 ) 0.273 (8,190 ) Net income (241,000 ) (66,004 ) R/E, 1/1/08 (133,000) Schedule 1 (38,244) Net income (241,000) Above (66,004) Dividends paid 50,000 0.275 13,750 R/E,12/31/08 (324,000 ) (90,498 ) Cash and receivables 146,000 0.270 39,420 Inventory 297,000 0.270 80,190 Prepaid rent (adjusted) 10,000 0.270 2,700 Fixed assets 455,000 0.270 122,850 Total 908,000 245,160 Accounts payable (54,000) 0.270 (14,580) Notes payable (140,000) 0.270 (37,800)
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Common stock (240,000) 0.300 (72,000) Add’l paid-in capital (150,000) 0.300 (45,000) Retained earnings, 12/31/08 (324,000 ) Above (90,498 ) Subtotal (259,878) Cumulative translation adjustment (negative) Schedule 2 14,718 Total (908,000 ) (245,160 )
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35. (continued) Schedule 1—Translation of 1/1/08 Retained Earnings
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Chapter 10-16 - CHAPTER 10 TRANSLATION OF FOREIGN CURRENCY...

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