Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 76,000 pounds. The subsidiary immediately borrowed 180,000 pounds on a five-year note with 6 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 256,000 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 8,400 pounds per month. By year-end, rent payments totaling 84,000 pounds had been received, and 16,800 pounds was in accounts receivable. On October 1, 2020, 3,200 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,800 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 |
$ |
2.80 |
= |
1 Pound |
October 1, 2020 |
|
2.85 |
= |
1 |
December 31, 2020 |
|
2.88 |
= |
1 |
Average for 2020 |
|
2.84 |
= |
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.
Extracted text: SULLIVAN'S ISLAND COMPANY Balance Sheet December 31, 2020 Pounds U.S. Dollars Assets: Total assets 0 $ Liabilities and Equities: Total liabilities and equities 0 $
Extracted text: SULLIVAN'S ISLAND COMPANY Statement of Retained Earnings For the Year Ended December 31, 2020 Pounds U.S. Dollars Retained earnings, 1/1 Retained earnings, 12/31 0 $