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 primar¬ ily 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, 2009, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows:

Main Operation—Canada LO6 Debit Accounts payable.

Accumulated depreciation.

Buildings and equipment.C$167,000 Cash. 26,000 Commonstock.

Cost of goods sold.203,000 Depreciation expense. 8,000 Dividends paid, 4/1/09. 28,000 Gain on sale of equipment, 6/1/09.

Inventory.98,000 Notes payable—due in2012.

Receivables. 68,000 Retained earnings,1/1/09.

Salary expense.26,000 Sales.

Utility expense. 9,000 Branch operation. 7,530 Totals.C$640,530 Credit C$ 35,000 27,000 50,000 5,000 76,000 135,530 312,000 C$640,530 Branch Operation—Mexico Debit Accounts payable.

Accumulated depreciation.

Building and equipment.Ps 40,000 Cash. 59,000 Depreciation expense. 2,000 Inventory (beginning—income statement). 23,000 Inventory (ending—income statement).

Inventory (ending—balance sheet). 28,000 Purchases.68,000 Receivables. 21,000 Credit Ps 49,000 19,000 28,000 Salary expense Sales.
Main office . .
Totals 9,000 124,000 _ 30,000 Ps 250,000 Ps 250,000 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 2005 when the currency exchange rate was C$0.25 = Ps 1.
Purchases should be assumed as having been made evenly throughout the fiscal year.
Beginning inventory was acquired evenly throughout 2008; ending inventory was acquired evenly throughout 2009.
The Main Office account on the Mexican records should be considered an equity account. This bal¬ ance was remeasured into C$7,530 on December 31,2009.
• Currency exchange rates for 1 Ps applicable to the Mexican operation follow:
Weighted average, 2008.C$0.30 January 1, 2009.o.32 Weighted average rate for 2009. 0.34 December 31,2009.o.35 The December 31, 2008, consolidated balance sheet reported a cumulative translation adjustment with a $36,950 credit (positive) balance.
• The subsidiary’s common stock was issued in 2004 when the exchange rate was $0.45 = C$ 1.
• The subsidiary’s December 31, 2008, Retained Earnings balance was C$135,530, a figure that has been translated into US$70,421.
• The applicable currency exchange rates for 1 C$ for translation purposes are as follows:
January 1, 2009.US$0.70 April 1,2009.0.69 June 1, 2009.0.68 Weighted average rate for 2009. 0.67 December 31,2009. 0.65

a. Remeasure the Mexican operation’s figures into Canadian dollars. (Hint: Back into the begin¬ ning 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.

c. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements.