Assume that your company owns a subsidiary operating in Australia. The subsidiary has adopted the Australian Dollar (AUD) as its local currency. Your parent company operates this subsidiary like a division or a branch office, making all of its operating decisions, including pricing of its products. You conclude, therefore, that the functional currency of this subsidiary is the $US.

The relevant exchange rates for the $US value of the Australian Dollar (AUD) are as follows:

1 AUD = BOY rate	$0.78
EOY rate	$0.95
Avg. rate	$0.85
Dividend rate	$0.94
Historical rates:
Beginning inventory	$0.78
Land	$0.62
Building	$0.63
Equipment	$0.64
Historical rate (common stock and APIC)	$0.50

The subsidiary's financial statements (in AUD) for the most recent year follow in a. below:

Beginning inventory	$2,980,000
Purchases	7,796,000
Ending inventory	(3,576,000)
Cost of goods sold	$7,200,000
Land	$2 ,614,400
Building	4,800,000
Accum.deprec.-building	(2,400,000)
Equipment	3,200,000
Accum.deprec.-equipment	(1,600,000)
Property, plant, and equipment (PPE), net	$6,614,400
Depreciation expense-building	$240,000
Depreciation expense-equipment	320,000
Depreciation expense	$560,000
Income statement:
Sales	$12,000,000
Cost of goods sold	(7,200,000)
Gross profit	4,800,000
Operating expenses	(2,560,000)
Depreciation	(560,000)
Net income	$1,680,000
Statement of retained earnings:
BOY retained earnings	$6,300,000
Net income	1,680,000
Dividends	(168,000)
Ending retained earnings	$7,812,000
Balance sheet:
Assets
Cash	$3 ,415,200
Accounts receivable	2,784,000
Inventory	3,576,000
Property, plant, and equipment (PPE), net	6,614,400
Total assets	$16,389,600
Liabilities and stockholders' equity
Current liabilities	$2,035,200
Long-term liabilities	4,742,400
Common stock	800,000
APIC	1,000,000
Retained earnings	7,812,000
Total liabilities and equity	$16,389,600

Prepare the subsidiary's income statement, statement of retained earnings, and balance sheet into $US. The functional currency is the (assume that the BOY Retained Earnings is $4,334,896).