Mohammad Ameri is a vice president of the United Fruit Company’s Guatemalan operations in Latin America, a multinational company, based in Spain in Europe. Please note that in Guatemala the Guatemalan currency has the initial - GTQand Spain is a member of the European Union and its currency is the Euro. Mr. Mohammad Ameri, as vice president of the company, earns a fixed annual salary and a 10% annual bonus based on the pre-tax income of the company’s Guatemalan operations.

A condensed income statement for 2019 of the United Fruit Company’s Guatemalan subsidiary is as follows:

United Fruit Company Condensed Income Statement For the year ended 2019
	GTQ (000)
Sales	1,260,000
Cost of goods sold	840,000
Gross profit	420,000
Selling expenses	84,000
Administrative expenses	147,000
Total expenses	231,000
Pre-tax income	189,000

Required:

     

a.  If the exchange rate for Euro = GTQ 10.50 / Euro convert the income statement to Euro.

b.  If Mohammad Ameri’s contract discloses that his annual bonus is 10% of the pre-tax annual income of the subsidiary in Guatemala after conversion to Euro, determine Mr. Ameri’s bonus for 2019.

c. If the Guatemalan subsidiary sales were GTQ 250,000 for 2019, with all other amounts remaining equal what would be the amount of Mr. Ameri’s 10% bonus for 2019?