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Problem 10-26 (LO 10-3) Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 78,000 pounds. The subsidiary immediately borrowed 185,000 pounds on a five-year note with 7 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 263,000 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 7,000 pounds per month. By year-end, rent payments totaling 70,000 pounds had been received, and 14,000 pounds was in accounts receivable. On October 1, 3.300 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 4,800 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 anuary 1, 2017 2.991 Pound October 1, 2017 December 31, 2017 Average for 2017 2.95 1 .981 2.941 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

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