es Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2024, by investing capital in the amount of 77,000 pounds. The subsidiary immediately borrowed 147,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 224,000 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, 2024, the subsidiary rented the building for three years to a group of local attorneys for 8,400 pounds per month. By year-end, rent payments totaling 84,000 pounds had been received, and 16,800 pounds was in accounts receivable. On October 1, 2024, 3,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 12,700 pounds back to Sullivan's Island Company on December 31, 2024. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2024 October 1, 2024 December 31, 2024 Average for 2024 Required: $ 2.10 2.15 1 Pound 1 Pound 2.18 1 Pound 2.14 = 1 Pound Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary, and then translate this statement into U.S. dollars. Note: Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be indicated with minus sign. Operating Activities: SULLIVAN'S ISLAND COMPANY Statement of Cash Flows Pounds Exchange Rate U.S. Dollars Cash flow from operating activities Investing Activities: 0
es Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2024, by investing capital in the amount of 77,000 pounds. The subsidiary immediately borrowed 147,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 224,000 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, 2024, the subsidiary rented the building for three years to a group of local attorneys for 8,400 pounds per month. By year-end, rent payments totaling 84,000 pounds had been received, and 16,800 pounds was in accounts receivable. On October 1, 2024, 3,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 12,700 pounds back to Sullivan's Island Company on December 31, 2024. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2024 October 1, 2024 December 31, 2024 Average for 2024 Required: $ 2.10 2.15 1 Pound 1 Pound 2.18 1 Pound 2.14 = 1 Pound Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary, and then translate this statement into U.S. dollars. Note: Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be indicated with minus sign. Operating Activities: SULLIVAN'S ISLAND COMPANY Statement of Cash Flows Pounds Exchange Rate U.S. Dollars Cash flow from operating activities Investing Activities: 0
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, 2024, by investing capital in the amount of
77,000 pounds. The subsidiary immediately borrowed 147,000 pounds on a five-year note with 10 percent interest payable annually
beginning on January 1, 2025. The subsidiary then purchased for 224,000 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, 2024, the subsidiary rented the building for
three years to a group of local attorneys for 8,400 pounds per month. By year-end, rent payments totaling 84,000 pounds had been
received, and 16,800 pounds was in accounts receivable. On October 1, 2024, 3,800 pounds was paid for a repair made to the
building. The subsidiary transferred a cash dividend of 12,700 pounds back to Sullivan's Island Company on December 31, 2024. The
functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow:
January 1, 2024
October 1, 2024
December 31, 2024
Average for 2024
Required:
$ 2.10
2.15
1 Pound
1 Pound
2.18 1 Pound
2.14 = 1 Pound
Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary, and then translate this statement into
U.S. dollars.
Note: Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be indicated
with minus sign.
Operating Activities:
SULLIVAN'S ISLAND COMPANY
Statement of Cash Flows
Pounds
Exchange Rate U.S. Dollars
Cash flow from operating activities
Investing Activities:
0
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