On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investmentcost of Swiss francs (SFr) 71,000. SunTime's December 31, 20X1, trial balance in SFr is as follows:CashAccounts Receivable (net)Receivable from Popular CreekInventoryPlant and EquipmentAccumulated DepreciationAccounts PayableBonds PayableCommon StockSalesCost of Goods SoldDepreciation ExpenseOperating ExpenseDividends PaidTotalAdditional InformationJanuary 1March 1DebitSFr 8,30023,0007,00028,000110,000SFr 1 = $ 0.73SFr 1 = $ 0.74SFr 1 $ 0.77SFr 1 =$ 0.80SFr 1 = $ 0.7570,50011,10031,00018,000SFr 306,900CreditSFr 11,10012,40052,00071,000160,4001. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $6,000 payable to SunTime.2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken inthe year of acquisition. The equipment was acquired on March 1.4. The dividends were declared and paid on November 1.5. Exchange rates were as follows:SFr 306,900November 1December 3120X1 average6. The Swiss franc is the functional currency.Required:a. Prepare a proof of the translation adjustment.b. Where is the translation adjustment reported on Popular Creek's consolidated financial statements and its foreign subsidiary?

On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 71,000. SunTime's December 31, 20X1, trial balance in SFr is as follows: Cash Accounts Receivable (net) Receivable from Popular Creek Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Sales Cost of Goods Sold Depreciation Expense Operating Expense Dividends Paid Total Debit SFr 8,300 23,000 7,000 28,000 110,000 70,500 11,100 31,000 18,000 SFr 306,900 Credit SFr 11,100 12,400 52,000 71,000 160,400 SFr 306,900

On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 71,000. SunTime's December 31, 20X1, trial balance in SFr is as follows: Cash Accounts Receivable (net) Receivable from Popular Creek Inventory Plant and Equipment Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Sales Cost of Goods Sold Depreciation Expense Operating Expense Dividends Paid Total Debit SFr 8,300 23,000 7,000 28,000 110,000 70,500 11,100 31,000 18,000 SFr 306,900 Credit SFr 11,100 12,400 52,000 71,000 160,400 SFr 306,900

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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