Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 228,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2017, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2017. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2017 $ 2.40 = 1 Pound October 1, 2017 2.45 = 1 December 31, 2017 2.48 = 1 Average for 2017 2.44 = 1 Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and then translate these amounts into U.S. dollars. repare a Income Statement. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Income Statement For the Year Ended December 31, 2017 Pounds U.S. Dollars Prepare a Statement of Retained earnings. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Statement of Retained Earnings For the Year Ended December 31, 2017 Pounds U.S. Dollars Retained earnings, 1/1 Retained earnings, 12/31 0 $0 Prepare a Balance Sheet. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Balance Sheet December 31, 2017 Pounds U.S. Dollars Assets: Total assets 0 $0 Liabilities and Equities: Total liabilities and equities 0 $0
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 228,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2017, the subsidiary rented the building for three years to a group of local attorneys for 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2017. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow:
| January 1, 2017 | $ | 2.40 | = | 1 Pound |
| October 1, 2017 | 2.45 | = | 1 | |
| December 31, 2017 | 2.48 | = | 1 | |
| Average for 2017 | 2.44 | = | 1 |
Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and then translate these amounts into U.S. dollars.
repare a Income Statement. (Amounts to be deducted should be indicated by a minus sign.)
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Prepare a Statement of Retained earnings. (Amounts to be deducted should be indicated by a minus sign.)
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Prepare a Balance Sheet. (Amounts to be deducted should be indicated by a minus sign.)
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