Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by...
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Sullivan's Island Company began operating a subsidiary in aforeign country on January 1, 2017, by investing capital in theamount of 55,000 pounds. The subsidiary immediately borrowed136,000 pounds on a five-year note with 10 percent interest payableannually beginning on January 1, 2018. The subsidiary thenpurchased for 191,000 pounds a building that had a 10-year expectedlife and no salvage value and is to be depreciated using thestraight-line method. Also on January 1, 2017, the subsidiaryrented the building for three years to a group of local attorneysfor 7,500 pounds per month. By year-end, rent payments totaling75,000 pounds had been received, and 15,000 pounds was in accountsreceivable. On October 1, 4,400 pounds was paid for a repair madeto the building. The subsidiary transferred a cash dividend of11,800 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:
January 1,2017 $ 2.20 = 1 Pound October 1,2017 2.25 = 1 December 31,2017 2.28 = 1 Average for2017 2.24 = 1
Prepare a statement of cash flows in pounds for Sullivan'sIsland Company's foreign subsidiary and then translate theseamounts into U.S. dollars
Sullivan's Island Company began operating a subsidiary in aforeign country on January 1, 2017, by investing capital in theamount of 55,000 pounds. The subsidiary immediately borrowed136,000 pounds on a five-year note with 10 percent interest payableannually beginning on January 1, 2018. The subsidiary thenpurchased for 191,000 pounds a building that had a 10-year expectedlife and no salvage value and is to be depreciated using thestraight-line method. Also on January 1, 2017, the subsidiaryrented the building for three years to a group of local attorneysfor 7,500 pounds per month. By year-end, rent payments totaling75,000 pounds had been received, and 15,000 pounds was in accountsreceivable. On October 1, 4,400 pounds was paid for a repair madeto the building. The subsidiary transferred a cash dividend of11,800 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:
| January 1,2017 | $ | 2.20 | = | 1 Pound |
| October 1,2017 | 2.25 | = | 1 | |
| December 31,2017 | 2.28 | = | 1 | |
| Average for2017 | 2.24 | = | 1 |
Prepare a statement of cash flows in pounds for Sullivan'sIsland Company's foreign subsidiary and then translate theseamounts into U.S. dollars
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