Pel, a U.S. firm, paid $308,000 for all the common stock of Sar of Israel on January 1, 2016, when theexchange rate for sheqels was $0.35. Sar's equity on this date consisted of 500,000 sheqels common stockand 300,000 sheqels retained earnings. The $28,000 (80,000 sheqels) excess is attributable to a patentwith a 10-year amortization period. Sar's functional currency is the sheqel.Sar's adjusted trial balance at December 31, 2016, in sheqels is as follows:SheqelsDebitsCashReceivables-netInventoriesLandEquipment-netBuildings-netExpensesExchange loss (advance)Dividends40,00050,000150,000CreditsAccounts payableOther liabilitiesAdvance from Pel160,000Common stock300,000 Retained earnings 1/1500,000 Sales400,00020,000100,0001,720,000Sheqels120,00060,000140,000500,000300,000600,0001,720,000On January 2, 2016, Pel advanced $42,000 (120,000 sheqels) to Sar. This advance was short-term, denominated in U.S. dollars, and made when the exchange rate for sheqels was $0.35. InJune 2016, Sar paid a 100,000-sheqel dividend when the exchange rate was $0.33. The average andyear-end exchange rates for sheqels are $0.32 and $0.30, respectively.REQUIRED1. Prepare a worksheet to translate Sar's adjusted trial balance at December 31, 2016, into U.S. dollars.2. Prepare the necessary journal entries for Pel to account for its investment in Sar for 2016.

Trial balance is the list of the debit and credit entries prepared by the business to record all the…

REQUIRED 1. Prepare a worksheet to translate Sar's adjusted trial balance at December 31, 2016, into U.S. dollars. 2. Prepare the necessary journal entries for Pel to account for its investment in Sar for 2016.

REQUIRED 1. Prepare a worksheet to translate Sar's adjusted trial balance at December 31, 2016, into U.S. dollars. 2. Prepare the necessary journal entries for Pel to account for its investment in Sar for 2016.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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