Assume that your company owns a subsidiary operating in France. The subsidiary conducts most of its business activities in the European Economic Union and maintains its books in the Euro as its functional currency. The subsidiary's financial statements (in ) for the most recent year follow in part a. below:

The relevant exchange rates ($:1) are as follows:

BOY rate	$1.19
EOY rate	$1.24
Avg. rate	$1.21
PPE purchase date rate	$1.22
LTD borrowing date rate	$1.22
Dividend rate	$1.23
Historical rate (common stock and APIC)	$1.00

For both parts a. and b. below, use a negative sign with answers to indicate a reduction.

a. Translate the subsidiarys income statement, statement of retained earnings, balance sheet, and statement of cash flows into $US (assume that the BOY Retained Earnings is $461,343).

Income Statement:	In Euros	Translation Rate	In US Dollars
Sales	1,125,000
Cost of goods sold	(675,000)
Gross profit	450,000
Operating expenses	(292,500)
Net income	157,500
Statement of Retained Earnings:
BOY retained earnings	590,625
Net income	157,500
Dividends	(15,750)
EOY retained earnings	732,375
Balance Sheet:
Assets
Cash	320,175
Accounts receivable	261,000
Inventory	335,250
Property, plant, and equipment (PPE), net	620,100
Total assets	1,536,525
Liabilities and stockholders' equity
Current liabilities	190,800
Long-term liabilities	444,600
Common stock	75,000
APIC	93,750
Retained earnings	732,375
Cumulative translation adjustmentEffect of exchange rate on cash
Total liabilities and equity	1,536,525
Statement of Cash Flows:
Net income	157,500
Change in accounts receivable	(43,500)
Change in inventories	(55,875)
Change in current liabilities	31,800
Net cash from operating activities	89,925
Change in PPE, net	(57,600)
Net cash from investing activities	(57,600)
Change in long-term debt	74,100
Dividends	(15,750)
Net cash flows from financing activities	58,350
Net change in cash	90,675
Effect of exchange rate on cash
Beginning cash	229,500
Ending cash	320,175

b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $273,564.

Direct computation of translation adjustment:
BOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year
Net income x (EOY - Average exchange rate)
BOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year
BOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year
EOY cumulative translation adjustment