Assignment: Foreign Currency Translation for Individual Transactions and Financial Statements Objective: To understand the principles of foreign currency translation and its application in individual transactions and financial statements. Part A: Individual Transactions As an accountant of ABC Company, you have been assigned to record the following transactions in foreign currencies and translate them into the company's functional currency. 1. On January 1, 20X1, ABC Company purchased merchandise from a supplier in Japan for 500,000. The exchange rate on that date was $0.0080 per yen. On January 31 , 20XI, ABC Company paid the supplier in full. 2. On July 1, 20X1, ABC Company received payment from a customer in Switzerland for CHF100,000 for services rendered. The exchange rate on that date was $0.9000 per Swiss Franc. ABC Company deposited the payment in its bank account. Part B: Financial Statements As an accountant of ABC Company, you have been assigned to prepare the company's financial statements for the year ended December 31,20X, which include transactions in foreign currencies. The following information is provided: - ABC Company's functional currency is US dollars (\$). - ABC Company had a subsidiary in Japan (AB Japan) and a subsidiary in Germany (AB Germany) for the entire year. - AB Japan's books are kept in Japanese yen ( ) and its financial statements are translated into US dollars using the current exchange rate. AB Japan had sales of 10,000,000 and cost of goods sold of 5,000,000 during the year. The exchange rates were: - January 1, 20X1: $0.0080 per yen - December 31, 20X1: \$0.0075 per yen 2. On July 1, 20X1, ABC Company received payment from a customer in Switzerland for CHF100,000 for services rendered. The exchange rate on that date was $0.9000 per Swiss Franc. ABC Company deposited the payment in its bank account. Part B: Financial Statements As an accountant of ABC Company, you have been assigned to prepare the company's financial statements for the year ended December 31,20X, which include transactions in foreign currencies. The following information is provided: - ABC Company's functional currency is US dollars (\$). - ABC Company had a subsidiary in Japan (AB Japan) and a subsidiary in Germany (AB Germany) for the entire year. - AB Japan's books are kept in Japanese yen ( ) and its financial statements are translated into US dollars using the current exchange rate. AB Japan had sales of 10,000,000 and cost of goods sold of 5,000,000 during the year. The exchange rates were: - January 1, 20X1: $0.0080 per yen - December 31, 20X1: $0.0075 per yen - AB Germany's books are kept in euros () and its financial statements are translated into US dollars using the current exchange rate. AB Germany had sales of 1,000,000 and cost of goods sold of 500,000 during the year. The exchange rates were: - January 1, 20X1: $1.1500 per euro - December 31, 20X1: \$1.1000 per euro - ABC Company made the following transactions during the year: - Purchased merchandise from a supplier in Japan for 500,000 on January 1, 20X1. Paid the supplier on January 31 , 20X1, at an exchange rate of $0.0075 per yen. - Received payment from a customer in Switzerland for CHF 100,000 on July 1, 20X1, at an exchange rate of $0.9000 per Swiss Franc