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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 73,000 pounds. The subsidiary immediately borrowed 139,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 212,000 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 7,000 pounds per month. By year-end, rent payments totaling 70,000 pounds had been received, and 14,000 pounds was in accounts receivable. On October 1, 2024, 4,700 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, 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: $ 3.30 1 Pound 3.35 = 1 Pound 3.38 = 1 Pound 3.34 = 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 Cash flow from operating activities Investing Activities: Statement of Cash Flows Pounds Exchange Rate U.S. Dollars 0 Cash flow from investing activities $ 0 $ Financing Activities: Cash flow from financing activities Effect of exchange rate change on cash Beginning balance in cash Ending balance in cash 0 0 $ 0

Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2024, by Investing capital in the amount of 73,000 pounds. The subsidiary immediately borrowed 139,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 212,000 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 7,000 pounds per month. By year-end, rent payments totaling 70,000 pounds had been received, and 14,000 pounds was in accounts receivable. On October 1, 2024, 4,700 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, 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: $ 3.30 1 Pound 3.35 = 1 Pound 3.38 = 1 Pound 3.34 = 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 Cash flow from operating activities Investing Activities: Statement of Cash Flows Pounds Exchange Rate U.S. Dollars 0 Cash flow from investing activities $ 0 $ Financing Activities: Cash flow from financing activities Effect of exchange rate change on cash Beginning balance in cash Ending balance in cash 0 0 $ 0

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, 2024, by Investing capital in the amount of 73,000 pounds. The subsidiary immediately borrowed 139,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 212,000 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 7,000 pounds per month. By year-end, rent payments totaling 70,000 pounds had been received, and 14,000 pounds was in accounts receivable. On October 1, 2024, 4,700 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, 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: $ 3.30 1 Pound 3.35 = 1 Pound 3.38 = 1 Pound 3.34 = 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 Cash flow from operating activities Investing Activities: Statement of Cash Flows Pounds Exchange Rate U.S. Dollars 0 Cash flow from investing activities $ 0 $ Financing Activities: Cash flow from financing activities Effect of exchange rate change on cash Beginning balance in cash Ending balance in cash 0 0 $ 0
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 73,000 pounds. The subsidiary immediately borrowed 139,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2025. The subsidiary then purchased for 212,000 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 7,000 pounds per month. By year-end, rent payments totaling 70,000 pounds had been received, and 14,000 pounds was in accounts receivable. On October 1, 2024, 4,700 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, 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: $ 3.30 1 Pound 3.35 = 1 Pound 3.38 = 1 Pound 3.34 = 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 Cash flow from operating activities Investing Activities: Statement of Cash Flows Pounds Exchange Rate U.S. Dollars 0 Cash flow from investing activities $ 0 $ Financing Activities: Cash flow from financing activities Effect of exchange rate change on cash Beginning balance in cash Ending balance in cash 0 0 $ 0
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