1 . On January 2, 200X, Parliament Corporation, a US multinational enterprise, a
ID: 2475540 • Letter: 1
Question
1. On January 2, 200X, Parliament Corporation, a US multinational enterprise, acquired all the outstanding common stock of Sirius Company, which is located in a country whose currency is the Euro. The books are kept in Euros and the Euro is the functional currency.
Remeasure and/or translate the 200X Sirius financial statements to the reporting currency (US dollars).
Sirius Company Financial Statements
For the Year Ending December 31, 200X (in EUROs)
Income Statement
Sales
100,000
Cost of Goods Sold
(60,000)
Operating Expenses
(20,000)
Net Income
20,000
Statement of Retained Earnings
Beginning Retained Earnings
70,000
Net Income
20,000
Ending Retained Earnings
90,000
Balance Sheet
Current Assets
130,000
Plant
820,000
Total Assets
950,000
Current Liabilities
60,000
Long Term Debt
340,000
Total Liabilities
400,000
Common Stock
200,000
Paid in Capital
260,000
Retained Earnings
90,000
Total Equity
550,000
Total Liabilities and Equity
950,000
One EURO=
Current rate
$1.40
Average rate
$1.30
Historic rate
$1.20
2.
The Trial Balance of the Paris Branch of Cisalpine Company on Dec 31, 200X is presented below:
Balance in Euros
Cash 300,000
Inventory 120,000
Common Stock (400,000)
Retained Earnings ( 7,000)
Sales (120,000)
Cost of Goods Sold 85,000
Operating expenses 22,000
Conversion rates:
Current One Euro = $1.08
Average One Euro = $1.07
Historic One Euro = $1.06
US Dollars are the functional and reporting currency.
Complete the remeasurement of the Paris Branch to US dollars (the functional currency) on December 31, 200X.
3.
The following items were displayed in the statement of affairs for Lubbock Company:
Fully secured liabilities $90,000
Partially secured liabilities 12,000
Unsecured liabilities without priority 220,000
Unsecured liabilities with priority 8,000
Assets pledged for fully secured assets 120,000
Assets pledged for partially secured assets 6,000
Free Assets 120,000
Based on the foregoing information prepare a working paper showing the how the estimated amount received from the sale of assets will be distributed to the four classes of creditors.
4.
The trial balance of the Estate of Tom Beresford at April 17, 200X is as follows:
Debit (Credit)
Principal cash $ 20,750
GM Stock 50,000
GMAC Bonds 100,000
Interest receivable on bonds 2,500
Funeral and administrative expenses 6,800
Estate principal (180,050)
Prepare the journal entries on the books of the Estate of Tom Beresford to transfer the assets and close the books on April 17, 200X.
Prepare the journal entries on the books of the First State Bank to record the receipt of the assets an April 17, 200X.
Sirius Company Financial Statements
For the Year Ending December 31, 200X (in EUROs)
Income Statement
Sales
100,000
Cost of Goods Sold
(60,000)
Operating Expenses
(20,000)
Net Income
20,000
Statement of Retained Earnings
Beginning Retained Earnings
70,000
Net Income
20,000
Ending Retained Earnings
90,000
Balance Sheet
Current Assets
130,000
Plant
820,000
Total Assets
950,000
Current Liabilities
60,000
Long Term Debt
340,000
Total Liabilities
400,000
Common Stock
200,000
Paid in Capital
260,000
Retained Earnings
90,000
Total Equity
550,000
Total Liabilities and Equity
950,000
One EURO=
Current rate
$1.40
Average rate
$1.30
Historic rate
$1.20
Explanation / Answer
(Difference between Total assets and total liabilities and equity as per US Dollar (after transfer of net income) is adjusted to net income as Current year translation adjustment)
($453,600-$445,330)=$8,270
The closing entry for transfer of assets and close the books on April 17, 200X is as under:
Sirium company Financial Statement For the year ending 31st Dec, 200X Income Statement IN Euros Exchange Rate US Dollars Sales 100,000 $ 1.30 $ 130,000 Cost of goods sold (60,000) $ 1.30 $ (78,000) Operating expense (20,000) $ 1.30 $ (26,000) Net Income 20,000 $ 26,000 Statement of Retained Earnings: Beginning Retained Earnings 70,000 $ 1.20 $ 84,000 Net Income 20,000 $ 26,000 Ending Retained Earnings 90,000 $ 110,000 Balance sheet Current Assets 130,000 $ 1.40 $ 182,000 Plant 820,000 $ 1.40 $ 1,148,000 Total Assets 950,000 $ 1,330,000 Current Liabilities 60,000 $ 1.40 $ 84,000 Long term Debt 340,000 $ 1.40 $ 476,000 Total Liabilities 400,000 $ 560,000 Common stock 200,000 $ 1.20 $ 240,000 Paid in capital 260,000 $ 1.20 $ 312,000 Retained Earnings 90,000 $ 110,000 Total Equity 550,000 $ 662,000 Cummulative Translation adjustment $ 108,000 Total Liabilities & Equity 950,000 $ 1,330,000 2 The remeasurement of Paris Branch to US Dollars as on 31st December 200X is as under; Income Statement EURO Exchange Rate US Dollars Sales 120,000 $ 1.07 $ 128,400 Cost of goods sold (85,000) $ 1.07 $ (90,950) Gross profit 35,000 $ 37,450 Less: Operating expenses (22,000) $ 1.07 $ (23,540) Add: Current year translation adjustment $ 8,270 Net Income 13,000 $ 22,180 Balance sheet EURO Exchange Rate US Dollars Assets: Cash 300,000 $1.08 $324,000 Inventory 120,000 $ 1.08 $ 129,600 Total Assets; 420,000 $ 453,600 Liabilities: - $ - Equity: Common stock 400,000 $ 1.06 $ 424,000 Retained earnings 7,000 $1.06 $7,420 Net Income 13,000 $22,180 Total Equity 420,000 Total Liabilities and Equity 420,000 $ 453,600Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.