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Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percer interest payable annually beginning on January 1, 2021. 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, 2020, 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, 2020, 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, 2020. The functional currency for t subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and ther translate these amounts into U.S. dollars. $2.40 = 1 Pound 2.45 = 1 2.48 = 1 2.44 = 1 Complete this question by entering your answers in the tabs below. Income Statement Retained Earnings Prepare a Statement of Retained earnings. (Amounts to be deducted should be indicated by a minus sign.) Retained earnings, 1/1 Net income Dividends declared, 12/31 Retained earnings, 12/31 Balance Sheet SULLIVAN'S ISLAND COMPANY Statement of Retained Earnings For the Year Ended December 31, 2020 Pounds U.S. Dollars 0 $ 0

Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percer interest payable annually beginning on January 1, 2021. 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, 2020, 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, 2020, 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, 2020. The functional currency for t subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and ther translate these amounts into U.S. dollars. $2.40 = 1 Pound 2.45 = 1 2.48 = 1 2.44 = 1 Complete this question by entering your answers in the tabs below. Income Statement Retained Earnings Prepare a Statement of Retained earnings. (Amounts to be deducted should be indicated by a minus sign.) Retained earnings, 1/1 Net income Dividends declared, 12/31 Retained earnings, 12/31 Balance Sheet SULLIVAN'S ISLAND COMPANY Statement of Retained Earnings For the Year Ended December 31, 2020 Pounds U.S. Dollars 0 $ 0

FINANCIAL ACCOUNTING
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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Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, 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, 2021. 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, 2020, 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, 2020, 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, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 1 Pound $2.40 = 2.45 1 2.48 %3D 1 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. Complete this question by entering your answers in the tabs below. Income Retained Balance Sheet Statement Earnings 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, 2020 Pounds U.S. Dollars Retained earnings, 1/1 Net income Dividends declared, 12/31 Retained earnings, 12/31 $ Income Statement Balance Sheet >
Transcribed Image Text:Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, 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, 2021. 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, 2020, 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, 2020, 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, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 1 Pound $2.40 = 2.45 1 2.48 %3D 1 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. Complete this question by entering your answers in the tabs below. Income Retained Balance Sheet Statement Earnings 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, 2020 Pounds U.S. Dollars Retained earnings, 1/1 Net income Dividends declared, 12/31 Retained earnings, 12/31 $ Income Statement Balance Sheet >
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