Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2024, by investing capital in the amount of 78,000 pounds. The subsidiary immediately borrowed 185,000 pounds on a five-year note with 7 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 263,000 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 8,450 pounds per month. By year-end, rent payments totaling 84,500 pounds had been received, and 16,900 pounds was in accounts receivable. On October 1, 2024, 3,300 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,775 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: $ 2.901 Pound 2.951 Pound 3.08 1 Pound 2.981 Pound 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 Statement Retained Earnings Balance Sheet Prepare an Income Statement. Note: Amounts to be deducted should be indicated by a minus sign. SULLIVAN'S ISLAND COMPANY Income Statement For the Year Ended December 31, 2024 Pounds U.S. Dollars
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2024, by investing capital in the amount of 78,000 pounds. The subsidiary immediately borrowed 185,000 pounds on a five-year note with 7 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 263,000 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 8,450 pounds per month. By year-end, rent payments totaling 84,500 pounds had been received, and 16,900 pounds was in accounts receivable. On October 1, 2024, 3,300 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,775 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: $ 2.901 Pound 2.951 Pound 3.08 1 Pound 2.981 Pound 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 Statement Retained Earnings Balance Sheet Prepare an Income Statement. Note: Amounts to be deducted should be indicated by a minus sign. SULLIVAN'S ISLAND COMPANY Income Statement For the Year Ended December 31, 2024 Pounds U.S. Dollars
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, 2024, by investing capital in the amount of
78,000 pounds. The subsidiary immediately borrowed 185,000 pounds on a five-year note with 7 percent interest payable annually
beginning on January 1, 2025. The subsidiary then purchased for 263,000 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 8,450 pounds per month. By year-end, rent payments totaling 84,500 pounds had been
received, and 16,900 pounds was in accounts receivable. On October 1, 2024, 3,300 pounds was paid for a repair made to the
building. The subsidiary transferred a cash dividend of 11,775 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:
$ 2.901 Pound
2.95 1 Pound
3.08 1 Pound
2.98 1 Pound
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
Statement
Retained
Earnings
Balance Sheet
Prepare an Income Statement.
Note: Amounts to be deducted should be indicated by a minus sign.
SULLIVAN'S ISLAND COMPANY
Income Statement
For the Year Ended December 31, 2024
Pounds
U.S. Dollars
< Income Statement
Retained Earnings >
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