Pel, a U.S. firm, paid $308,000 for all the common stock of Sar of Israel on January

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Pel, a U.S. firm, paid $308,000 for all the common stock of Sar of Israel on January 1, 2016, when the exchange rate for sheqels was $0.35. Sar's equity on this date consisted of 500,000 sheqels common stock and 300,000 sheqels retained earnings. The $28,000 (80,000 sheqels) excess is attributable to a patent with a 10-year amortization period. Sar's functional currency is the sheqel. Sar's adjusted trial balance at December 31, 2016, in sheqels is as follows:

Pel, a U.S. firm, paid $308,000 for all the common

On January 2, 2016, Pel advanced $42,000 (120,000 sheqels) to Sar. This advance was short term, denominated in U.S. dollars, and made when the exchange rate for sheqels was $0.35. In
June 2016, Sar paid a 100,000-sheqel dividend when the exchange rate was $0.33. The average and year-end exchange rates for sheqels are $0.32 and $0.30, respectively.
REQUIRED
1. Prepare a worksheet to translate Sar's adjusted trial balance at December 31, 2016, into U.S. dollars.
2. Prepare the necessary journal entries for Pel to account for its investment in Sar for 2016.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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Advanced Accounting

ISBN: 978-0134472140

13th edition

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

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