USE THE FOLLOWING FOR THE NEXT 2 PROBLEMS Munich Bratwerst Company balance sheet
ID: 2716877 • Letter: U
Question
USE THE FOLLOWING FOR THE NEXT 2 PROBLEMS
Munich Bratwerst Company
balance sheet
income statement
31-Dec 2016
in EU's
for the year 2016
Cash
10,000
sales
1,500,000
Accts rec
40,000
cogs
800,000
inventory
50,000
gross pro
700,000
equip net
100,000
land
400,000
deprec exp
100,000
oper exp
510,000
tot asset
600,000
net income
90,000
accts pay
50,000
dividends of 40,000 eu paid 6/30 when 2eu=$1
comm st
400,000
december 31, 2016 4eu =$1
average 2016 3 eu =$1
ret earn
150,000
June 1 1998 when stock acquired 1eu =$1
October 1, 1998 when equip purchased 1.5eu =$1
December 31, 2000 when land purchased 2eu=$1
retained earnings 1-1-16 $68,000
PREPARE A DOLLAR DENOMINATED: INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF EQUITY IF THE DOLLAR IS THE FUNCTIONAL CURRENCY (TEMPORAL METHOD)
PREPARE A DOLLAR DENOMINATED: INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF EQUITY IF THE EURO IS THE FUNCTIONAL CURRENCY (CURRENT RATE METHOD)
Munich Bratwerst Company
balance sheet
income statement
31-Dec 2016
in EU's
for the year 2016
Cash
10,000
sales
1,500,000
Accts rec
40,000
cogs
800,000
inventory
50,000
gross pro
700,000
equip net
100,000
land
400,000
deprec exp
100,000
oper exp
510,000
tot asset
600,000
net income
90,000
accts pay
50,000
dividends of 40,000 eu paid 6/30 when 2eu=$1
comm st
400,000
december 31, 2016 4eu =$1
average 2016 3 eu =$1
ret earn
150,000
June 1 1998 when stock acquired 1eu =$1
October 1, 1998 when equip purchased 1.5eu =$1
December 31, 2000 when land purchased 2eu=$1
retained earnings 1-1-16 $68,000
Explanation / Answer
Dollar Denominated:
Income statement (by using Average Rate 3eu=$1)
sales (1500000 * 3eu) $4500000
Less: COGS(800000 * 3eu) $2400000
Gross Profit $2100000
Less: Depreciation(100000*3eu) $300000
Less:Other Expenses(510000*3eu) $1530000
Net Income $270000
Balance Sheet (by using Closing Rate 4eu=$1)
Munich Bratwerst Company
$
Assets
Cash(10000 * 4eu) 40000
Accounts Receivable(40000*4eu) 160000
Inventories(50000*4eu) 200000
Equipment (100000*4eu) 400000
Land (400000 * 4eu) 1600000
Total Assets 2400000
Liabiliites
Account payable(50000 *4eu) 200000
Common Stock (400000*4eu) 1600000
Retained Earning(150000*4eu) 600000
Total Liabilities 2400000
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