Practice Kingsfield starts a subsidiary operation in a foreign country on Januar
ID: 2398471 • Letter: P
Question
Practice Kingsfield starts a subsidiary operation in a foreign country on January 1, 2015. The country's currency is the kumquat (KQ). To start this business, Kingsfield invests 10.000 kumquats. Of this amount, it spends 3,000 kumquats immediately to acquire equipment. Later, on April 1, 2015, it also purchases land. All subsidiary operational activities occur at an even rate throughout the year. The currency exchange rates for the kumquat for this year follow April 1, 2015 June 1, 2015 . 1.59 1.64 1.62 December 31, 2015.. As of December 31, 2015, the subsidiary reports the following trial balance Debits Credits KQ 8.000 9,000 3.000 Cash Accounts receivable Equipment Accumulated depreciation Land Accounts payable Notes payable idue 2018 Common stock KQ 600 5,000 3.000 5,000 10,000 4,000 Dividends dedared (6/1/15 25.000 Sales Salary expense 5,000 600 9.000 Depreciation expence Miscellaneous expenses Totab mg 43,600 ?43.600 A corporation based in East Lansing, Michigan, Kingsfield uses the US dollar as its reporting currencyExplanation / Answer
SOLUTION:
Solution:
Debit
Credit
Working
Cash
$12,960
8,000 KQ * 1.62
Accounts Receivable
$14,580
9,000 KQ * 1.62
Equipment
$4,860
3,000 KQ * 1.62
Accumulated Depreciation
$972
600 KQ * 1.62
Land
$8,100
5,000 KQ * 1.62
Accounts Payable
$4,860
3,000 KQ * 1.62
Notes Payable
$8,100
5,000 KQ * 1.62
Common Stock
$17,100
10,000 KQ * 1.71
Dividends Paid
$6,640
4,000 KQ * 1.66
Sales
$41,000
25,000 KQ * 1.64
Salary Expense
$8,200
5,000 KQ * 1.64
Dep Expense
$984
600 KQ * 1.64
Misc Expenses
$14,760
9,000 KQ * 1.64
Translation adjustment
$948
$72,032
$72,032
Working:
Net assets, 1/1
Net asset- Increase
Common stock issued
10,000
1.71
17100
Sales
25,000
1.64
41000
Net asset- Decrease
0
Dividends paid
-4,000
1.66
-6640
Salary expense
-5,000
1.64
-8200
Dep expense
-600
1.64
-984
Misc exp
-9,000
1.64
-14760
Net assets, 12/31
16,400
27516
Net assets, 12/31 at current exchange rate
16,400
1.62
26568
Transalation adjustment
948
?
Debit
Credit
Cash
$12,960
8,000 KQ * 1.62
Accounts Receivable
$14,580
9,000 KQ * 1.62
Equipment
$5,130
3,000 KQ * 1.71
Accumulated Depreciation
$1,026
600 KQ * 1.71
Land
$7,950
5,000 KQ * 1.59
Accounts Payable
$4,860
3,000 KQ * 1.62
Notes Payable
$8,100
5,000 KQ * 1.62
Common Stock
$17,100
10,000 KQ * 1.71
Dividends Paid
$6,640
4,000 KQ * 1.66
Sales
$41,000
25,000 KQ * 1.64
Salary Expense
$8,200
5,000 KQ * 1.64
Dep Expense
$1,026
600 KQ * 1.71
Mis Expenses
$14,760
9,000 KQ * 1.64
Translation adjustment
$840
$72,086
$72,086
Working:
Net assets, 1/1
Net asset- Increase
Common stock issued
10,000
1.71
17100
Sales
25,000
1.64
41000
Net monetary assets- Decrease
Acquired equipment
-3,000
1.71
-5130
Acquired land
-5,000
1.59
-7950
Dividends paid
-4000
1.66
-6640
Salary exp
-5,000
1.64
-8200
Misc exp
-9,000
1.64
-14760
Net assets, 12/31
9,000
15420
Net assets, 12/31 at current exchange rate
9,000
1.62
14580
Transalation adjustment
840
?
Debit
Credit
Working
Cash
$12,960
8,000 KQ * 1.62
Accounts Receivable
$14,580
9,000 KQ * 1.62
Equipment
$4,860
3,000 KQ * 1.62
Accumulated Depreciation
$972
600 KQ * 1.62
Land
$8,100
5,000 KQ * 1.62
Accounts Payable
$4,860
3,000 KQ * 1.62
Notes Payable
$8,100
5,000 KQ * 1.62
Common Stock
$17,100
10,000 KQ * 1.71
Dividends Paid
$6,640
4,000 KQ * 1.66
Sales
$41,000
25,000 KQ * 1.64
Salary Expense
$8,200
5,000 KQ * 1.64
Dep Expense
$984
600 KQ * 1.64
Misc Expenses
$14,760
9,000 KQ * 1.64
Translation adjustment
$948
$72,032
$72,032
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