Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 228,000 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 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for th subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 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. Income Statement Complete this question by entering your answers in the tabs below. $2.40 = 2.45 = 1 2.48 = 1 2.44 = 1 Retained Earnings 1 Pound Net income Prepare a Income Statement. (Amounts to be deducted should be indicated by a minus sign.) Rent revenue Interest expense Depreciation expense Repair expense Balance Sheet SULLIVAN'S ISLAND COMPANY Income Statement For the Year Ended December 31, 2020 Pounds U.S. Dollars 98,400 $ 240,096 98,400 $ 240,096 Income Statement Retained Earnings >
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 228,000 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 8,200 pounds per month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts receivable. On October 1, 2020, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for th subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 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. Income Statement Complete this question by entering your answers in the tabs below. $2.40 = 2.45 = 1 2.48 = 1 2.44 = 1 Retained Earnings 1 Pound Net income Prepare a Income Statement. (Amounts to be deducted should be indicated by a minus sign.) Rent revenue Interest expense Depreciation expense Repair expense Balance Sheet SULLIVAN'S ISLAND COMPANY Income Statement For the Year Ended December 31, 2020 Pounds U.S. Dollars 98,400 $ 240,096 98,400 $ 240,096 Income Statement Retained Earnings >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 68,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 8 percent
interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 228,000 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 8,200 pounds per
month. By year-end, rent payments totaling 82,000 pounds had been received, and 16,400 pounds was in accounts
receivable. On October 1, 2020, 2,800 pounds was paid for a repair made to the building. The subsidiary transferred a
cash dividend of 11,900 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 Pound
$2.40 =
2.45
1
2.48
%3D
1
2.44
1
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.
Complete this question by entering your answers in the tabs below.
Income
Retained
Balance Sheet
Statement
Earnings
Prepare a Income Statement. (Amounts to be deducted should be indicated by a minus sign.)
SULLIVAN'S ISLAND COMPANY
Income Statement
For the Year Ended December 31, 2020
Pounds
U.S. Dollars
Rent revenue
98,400
$ 240,096
Interest expense
Depreciation expense
Repair expense
Net income
98,400 $ 240,096
Income Statement
Retained Earnings >
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