San is a 90 percent-owned foreign subsidiary of Par, acquired by Par on January 1, 2011, at book value equal to fair value, when the exchange rate for LCUs of San's home country was $0.24. Sans functional currency is the LCU. Par made a 200,000 LCU loan to San on May 1, 2011, when the exchange rate for LCUs was $0.23. The loan is short-term and is denominated at $46,000. Adjusted trial balances of the affiliated companies at year-end 2011 are as follows:

San paid dividends in September, when the exchange rate was $0.21. The exchange rate for LCUs was $0.20 at December 31, 2011, and the average exchange rate for 2011 was $0.22.REQUIRED1. Prepare a worksheet to translate San's adjusted trial balance into U.S. dollars at December 31, 2011.2. Prepare the necessary journal entries for Par to account for its investment in San for 2011 under the equity method.3. Prepare consolidation working papers for Par Corporation and Subsidiary for the year ended December 31,2011.

Transcribed Image Text:

Par in U.S. Dollars San in LCU Debits Cash $ 25,100 90,000 46,000 110,000 150,000 300,000 220,000 230,000 150,000 180,000 Accounts receivable Short-term loan to San Inventories 230,000 250,000 600,000 800,000 Land Buildings Equipment Investment in San (100%) Cost of sales Depreciation expense Other expenses Exchange loss Dividends Equity adjustment 400,000 200,000 81,000 100,000 200,000 120,000 30,000 100,000 100,000 44,000 $1.996,100 2.760,000 Credits $ 120,000 Accumulated depreciation-buildings Accumulated depreciation-equipment Accounts payable Short-term loan from Par Capital stock Retained earnings January 1 Sales 300,000 60,000 400,000 130,000 230,000 800,000 200,000 700,000 241,100 500,000 220,000 800,000 Income from San 55,000 $1,996,100 2,760,000