Modern Earth Company, a US Multinational enterprise has branches in Jupiter and Mar. Both branches use...

 

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Modern Earth Company, a US Multinational enterprise has branches in Jupiter and Mar. Both branches use their own local currency unit (LCU-J) and (LCU-M), respectively. Home office sent cash and merchandise (billed at cost) to both branches. Jupiter Branch made no additional purchase of merchandise but Mars Branch made additional purchase of merchandise from outsiders. Periodic inventory system is used for all accounting records. The trial balance of Jupiter Branch and Mar Branch on December 31, Year XX in their own local currency units are shown as follows :- Jupiter Branch LCU-J Mar Branch LCU-M Dr. Cr. Cr. Dr. 3,000 2,400 3,000 15,000 1,500 1,200 Cash Accounts Receivable Merchandise Inventory, January 1 Furniture and Fixture 1,000 8,000 Allowance for Depreciation Accounts Payable Home Office Remittance to Home Office Remittance from Home Office 2,000 1,700 3,000 2,500 7,800 20,800 700 1,100 900 1,700 41,000 Sales 20,000 Sales return & allowances 1,000 2,100 14,000 Purchases Purchase return & allowances 1,000 Merchandise shipment from Home Office Administration Expense (Total) Selling Expense (Total) Depreciation Expense for Branch* 14,000 20,000 3,000 4,900 2,000 2,000 1,000 32,400 2,000 1.500 70,000 4,000 Total 32.400 70,000 Merchandise Inventory, December 31 • Depreciation is recorded as a separate expense item to facilitate conversion of this item in terms of asset cost. Additional information are as follows :- 1) the merchandise inventories for the two branches comprise of the following :- Jupiter Branch. LCU-J January I Year XX 1,000 December 31 Year XX 2,000 Mar Branch LCU - M January I Year XX December 31 Merchandise acquired from Home Office Merchandise acquired from outsiders 2,000 1,000 Year XX 1,000 3,000 2) From previous year translation records, the following were extracted. For Jupiter Branch Last year Ending Inventory (Merchandise acquired from Home Office) LCU-J 1,000 = $2,600 For Mars Branch Last year Ending Inventory (Merchandise acquired from Home Office) LCU-M 2,000 - S 5,400 Last year Ending Inventory (Merchandise acquired from outsiders) LCU-M 1,000 = $ 3,000 3) Exchange Rates :- Jupiter Branch 1 LCU-J - 2.7 S I LCU-J-2.924 I LCU-J = 2.5 S Rate on date of acquisition of merchandise from Home 1 LCU-J = 2.6 $ Mars Branch Jan 1 1 LCU-M = 3 S 1 LCU-M - 3.2S I LCU-M = 2.8S 1 LCU-M = 3.1 $ Year XX Dec. 31 Year XX Rate on date of purchase of furniture Office 4) The following figures are extracted from the trial balances of Home Office, the Modem Earth Company in US on December 31, Year XX, $ 5,100 4,800 4,400 58,000 (5,000) Cash Account Receivable Merchandise Inventory, Jan. 1 (Home Office) Building Allowance for depreciation (Building) Furniture & Fixtures Allowance for depreciation (Furniture) Accounts Payable Capital Stock (Jan. 1, Year XX) Earned surplus (Jan. 1, Year XX) Merchandise shipment to Jupiter Branch Merchandise shipment to Mars Branch Remittances to Jupiter Branch Remittances to Mars Branch 30,000 (4,000) (4,700) (120,000) (7,000) (36,400) (62,000) 2,295 5,287 (1,785) (3,432) 20,670 67,184 Remittances from Jupiter Branch Remittance from mars Branch Jupiter Branch Mars Branch Required : a) Translate the trial balance of Jupiter Branch into $ value. b) Translate the trial balance of Mar Branch into S value. c) If the Modern Earth Company's ending balance of inventory is $ 10,000 and net profit for the year xx is $ 57,419, what will be the total figures of combined balance sheet on December 31, Year xx. Modern Earth Company, a US Multinational enterprise has branches in Jupiter and Mar. Both branches use their own local currency unit (LCU-J) and (LCU-M), respectively. Home office sent cash and merchandise (billed at cost) to both branches. Jupiter Branch made no additional purchase of merchandise but Mars Branch made additional purchase of merchandise from outsiders. Periodic inventory system is used for all accounting records. The trial balance of Jupiter Branch and Mar Branch on December 31, Year XX in their own local currency units are shown as follows :- Jupiter Branch LCU-J Mar Branch LCU-M Dr. Cr. Cr. Dr. 3,000 2,400 3,000 15,000 1,500 1,200 Cash Accounts Receivable Merchandise Inventory, January 1 Furniture and Fixture 1,000 8,000 Allowance for Depreciation Accounts Payable Home Office Remittance to Home Office Remittance from Home Office 2,000 1,700 3,000 2,500 7,800 20,800 700 1,100 900 1,700 41,000 Sales 20,000 Sales return & allowances 1,000 2,100 14,000 Purchases Purchase return & allowances 1,000 Merchandise shipment from Home Office Administration Expense (Total) Selling Expense (Total) Depreciation Expense for Branch* 14,000 20,000 3,000 4,900 2,000 2,000 1,000 32,400 2,000 1.500 70,000 4,000 Total 32.400 70,000 Merchandise Inventory, December 31 • Depreciation is recorded as a separate expense item to facilitate conversion of this item in terms of asset cost. Additional information are as follows :- 1) the merchandise inventories for the two branches comprise of the following :- Jupiter Branch. LCU-J January I Year XX 1,000 December 31 Year XX 2,000 Mar Branch LCU - M January I Year XX December 31 Merchandise acquired from Home Office Merchandise acquired from outsiders 2,000 1,000 Year XX 1,000 3,000 2) From previous year translation records, the following were extracted. For Jupiter Branch Last year Ending Inventory (Merchandise acquired from Home Office) LCU-J 1,000 = $2,600 For Mars Branch Last year Ending Inventory (Merchandise acquired from Home Office) LCU-M 2,000 - S 5,400 Last year Ending Inventory (Merchandise acquired from outsiders) LCU-M 1,000 = $ 3,000 3) Exchange Rates :- Jupiter Branch 1 LCU-J - 2.7 S I LCU-J-2.924 I LCU-J = 2.5 S Rate on date of acquisition of merchandise from Home 1 LCU-J = 2.6 $ Mars Branch Jan 1 1 LCU-M = 3 S 1 LCU-M - 3.2S I LCU-M = 2.8S 1 LCU-M = 3.1 $ Year XX Dec. 31 Year XX Rate on date of purchase of furniture Office 4) The following figures are extracted from the trial balances of Home Office, the Modem Earth Company in US on December 31, Year XX, $ 5,100 4,800 4,400 58,000 (5,000) Cash Account Receivable Merchandise Inventory, Jan. 1 (Home Office) Building Allowance for depreciation (Building) Furniture & Fixtures Allowance for depreciation (Furniture) Accounts Payable Capital Stock (Jan. 1, Year XX) Earned surplus (Jan. 1, Year XX) Merchandise shipment to Jupiter Branch Merchandise shipment to Mars Branch Remittances to Jupiter Branch Remittances to Mars Branch 30,000 (4,000) (4,700) (120,000) (7,000) (36,400) (62,000) 2,295 5,287 (1,785) (3,432) 20,670 67,184 Remittances from Jupiter Branch Remittance from mars Branch Jupiter Branch Mars Branch Required : a) Translate the trial balance of Jupiter Branch into $ value. b) Translate the trial balance of Mar Branch into S value. c) If the Modern Earth Company's ending balance of inventory is $ 10,000 and net profit for the year xx is $ 57,419, what will be the total figures of combined balance sheet on December 31, Year xx.

Answer rating: 100% (QA)

a Translate trial balance of Jupiter Branch into value Juipter Branch Juipter Branch LCUJ USD Dr Cr Dr Cr Cash 1500 4050 Closing rate Dec 31 Year XX 29 Accounts receivable 1200 3480 Closing rate Dec 3... View the full answer