4 5 6 7 Kerry Manufacturing Company is a German subsidiary of a U.S. company. Kerry records its operations and prepares financial statements in euros. However, its functional currency is the British pound. 8 Kerry was organized and acquired by the U.S. company on June 1, 20X4. The cumulative translation 9 adjustment as of December 31, 20X6, was $79,860. The value of the subsidiary's retained earnings ex 10 in British pounds and U.S. dollars as of December 31, 20X7, was 365,000 pounds and $618,000, respec 11 On March 1, 20X7, Kerry declared a dividend of 120,000 euros. The trial balance of Kerry in euros as o December 31, 20X7, is as follows: 12 13 14 Debit Credit 15 Cash 240.000 16 Accounts Receivable (net) 2.760.000 17 Inventory (at cost) 3.720.000 18 Marketable Securities (at cost) 2.040.000 19 Prepaid Insurance 210.000 20 Depreciable Assets 8.730.000 21 Accumulated Depreciation 1.417.000 22 Cost of Goods Sold 17.697.000 23 Selling. General. and 24 Administrative Expense 4.762.000 25 Sales Revenue 26.430.000 26 Investment Income 180.000 27 Accounts Pavable 2.120.000 28 Unearned Sales Revenue 960.000 29 Loans and Mortgage Pavable 5.872.000 30 Common Stock 1.500.000 31 Paid-in Capital in Excess of Par 210.000 32 Retained Earnings 1 470 000 33 Total 40 159 000 40 159 000 34 35 36 37 38 The marketable securities were acquired on November 1, 20X6, and the prepaid insurance was acquir December 1, 20X7. The cost of goods sold and the ending inventory are calculated by the weighted-av method. 39 40 O 41 e following items are measured in at the December 31, 20x7. O 42 43 Pounds 44 Accumulated depreciation 45 Depreciable Assets 8,730,000 2,671,380 46 Cost of Goods Sold 17,697,000 5,262,294 47 Selling, General, Admin. Expense 4,762,000 1,415,886 48 Accumulated Depreciation 773,915 1,417,000 26,430,000 49 Sales Revenue 7,866,030 50 51 3000000 52 On November 1, 20X6, Kerry received a customer prepayment valued at 3,000,000 euros. On February 1, 20X7, 2,040,000 euros of the prepayment was earned. The balance remains unearned as of December 31, 20X7. 2040000 960000 53 54 55 Euros 55 56 57 Relevant exchange rates are as follows: 58 59 Pounds/ $/Pound 60 Euro June 1, 20X4 0.31 61 $1.60 March 1, 20X6 0.3 62 $1.64 November 1, 20X6 0.305 $1.65 63 0.31 December 31, 20X6 64 $1.68 0.302 February 1, 20X7 65 $1.67 March 1, 20X7 0.3 66 $1.66 December 1, 20X7 0.29 67 $1.64 68 December 31, 20X7 0.288 $1.64 20X7 average 0.297 69 $1.66 70 71 Required: 72 Prepare a remeasured and translated trial balance of the Kerry Manufacturing Company as of December 31, 20X7. 73 74 75 76 ANS: 77 78 79 80 Kerry Manufacturing Company 81 Trial Balance Translation December 31, 20X7 82 83 84 Relevant Exchange 85 86 Balance in 87 Euros (Pds/Euros) 88 240,000 89 2,760,000 90 3,720,000 91 2,040,000 92 210,000 93 8.730.000 94 17,697,000 95 4,762,000 96 97 40.159.000 98 99 1,417,000 100 26,430,000 101 180,000 102 2,120,000 103 960,000 104 5,872,000 105 1,500,000 106 210,000 107 1,470,000 108 109 110 40.159.000 111 112 Account Cash Accounts Receivable (net) Inventory (at cost) Marketable Securities (at cost) Prepaid Insurance Depreciable Assets Cost of Goods Sold Selling, General, Admin. Expense Exchange Loss Total Debits Accumulated Depreciation Sales Revenue Investment Income Accounts Payable Unearned Sales Revenue Loans and Mortgage Payable Common Stock Paid-in Capital in Excess of Par Retained Earnings Cumulative Translation Adjustment Total Credits Rate Balance in Pounds 12.183.001 0 12.183.001 Relevant Exchange Rate ($/Pds) Balance in Dollars 20.117.316 -19.392 20.117.316