Ch 08 P-35 A Saved Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2017, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: 40 points Main Operation-Canada Debit C$ Credit 21,695 33,000 eBook C$ 173,000 32,000 56,000 Print 209,000 7,500 25,000 5,600 References Accounts payable Accumulated depreciation Buildings and equipment Cash Common stock Cost of goods sold Depreciation expense Dividends, 4/1/17 Gain on sale of equipment, 6/1/17 Inventory Notes payable-due in 2020 Receivables Retained earnings, 1/1/17 Salary expense Sales Utility expense Branch operation Totals 85,000 75,000 74,000 141,590 29,000 318,000 9,600 6,785 C$ 650,885 C$ 650,885 Credit Ps 53,100 20,100 Branch OperationMexico Debit Accounts payable Accumulated depreciation Building and equipment Ps 46,000 Cash 62,000 Depreciation expense 2,600 Inventory beginning-income statement) 29,000 Inventory (ending-income statement) Inventory (ending-balance sheet) 31,000 Purchases 63,000 Receivables 27,000 Salary expense 9,600 Sales Main office Totals Ps 270,200 31,000 130,000 36,000 270, 200 Ps Additional Information The Canadian subsidiary's functional currency is the Canadian dollar, and Sendelbach's reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities. The building and equipment used in the Mexican operation were acquired in 2007 when the currency exchange rate was C$0.19 = Ps 1. Purchases of inventory were made evenly throughout the fiscal year. Beginning inventory was acquired evenly throughout 2016, ending inventory was acquired evenly throughout 2017. The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$6,785 on December 31, 2017. Currency exchange rates for 1 Ps applicable to the Mexican operation follow: C$ Weighted average, 2016 January 1, 2017 Weighted average rate for 2017 December 31, 2017 0.24 0.26 0.28 0.29 The December 31, 2016, consolidated balance sheet reported a cumulative translation adjustment with a $42,950 credit (positive) balance. 1. The subsidiary's common stock was issued in 2004 when the exchange rate was $0.51 = C$1. The subsidiary's December 31, 2016, retained earnings balance was C$141,590, an amount that has been translated into U.S.$66,803. The applicable currency exchange rates for 1 C$ for translation purposes are as follows: January 1, 2017 April 1, 2017 June 1, 2017 Weighted average rate for 2017 December 31, 2017 US$ 0.70 0.69 0.68 0.67 0.65 a. Remeasure the Mexican operation's account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.) b. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars. c. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements. Complete this question by entering your answers in the tabs below. Show less A Reg A Req B and C Remeasure the Mexican operation's account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.) (Input all amounts as positive values.) Canadian Dollars Debit Credit Accounts payable Accumulated depreciation Building and equipment Cash Depreciation expense Inventory (beginningincome statement) Inventory (endingincome statement) Inventory (ending-balance sheet) Purchases Receivables Salary expense Sales Main office Total b. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars. c. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements. (Round U.S. Dollar values to 2 decimal places. Amounts to be deducted and losses should be indicated with a minus sign.) Show less SENDELBACH CORPORATION Financial Statements For the Year Ended December 31, 2017 Canadian U.S. Dollar Dollar Income Statement: Sales cst Cost of goods sold Gross profit s 0 S 0.00 Depreciation expense Salary expense Utility expense Gain on sale of equipment Remeasurement loss Net income cs 0 S 0.00 cst Statement of Retained Earnings: Retained earnings, 1/1/15 Net income Dividends Retained earnings, 12/31/15 cs s 0.00 Balance Sheet: Assets: Cash Receivables Inventory Buildings and equipment Accumulated depreciation cs 0 S 0.00 Total Liabilities and Equities: Accounts payable Notes payable Common stock Retained earnings Total c sos 0.00