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Sullivan's Island Company began operating a subsidiary in a foreign 61,000 pounds. The subsidiary immediately borrowed 158,000 pour beginning on January 1, 2021. The subsidiary then purchased for 219 salvage value and is to be depreciated using the straight-line metho three years to a group of local attorneys for 8,600 pounds per mont received, and 17,200 pounds was in accounts receivable. On Octobe building. The subsidiary transferred a cash dividend of 12,900 pound functional currency for the subsidiary is the pound. Currency exchan 2020 70

Sullivan's Island Company began operating a subsidiary in a foreign 61,000 pounds. The subsidiary immediately borrowed 158,000 pour beginning on January 1, 2021. The subsidiary then purchased for 219 salvage value and is to be depreciated using the straight-line metho three years to a group of local attorneys for 8,600 pounds per mont received, and 17,200 pounds was in accounts receivable. On Octobe building. The subsidiary transferred a cash dividend of 12,900 pound functional currency for the subsidiary is the pound. Currency exchan 2020 70

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 61,000 pounds. The subsidiary immediately borrowed 158,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 219,000 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 8,600 pounds per month. By year-end, rent payments totaling 86,000 pounds had been received, and 17,200 pounds was in accounts receivable. On October 1, 2020, 4,500 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 12,900 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 $ 1.70 = 1 Pound. 1.75 1 1.78 = 1 1.74 = 1 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. (Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be indicated with minus sign.)
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 61,000 pounds. The subsidiary immediately borrowed 158,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 219,000 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 8,600 pounds per month. By year-end, rent payments totaling 86,000 pounds had been received, and 17,200 pounds was in accounts receivable. On October 1, 2020, 4,500 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 12,900 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 $ 1.70 = 1 Pound. 1.75 1 1.78 = 1 1.74 = 1 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. (Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be indicated with minus sign.)
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