Assume that your company owns a subsidiary operating in Great Britain. The subsidiary maintains its books in the British pound (GBP) as its functional currency. The subsidiary's financial statements (in GBP) for the most recent year follow in part a. below:

The relevant exchange rates for the $US value of the British pound (GBP) are as follows:

BOY rate	$1.40
EOY rate	$1.47
Avg. rate	$1.43
PPE purchase date rate	$1.44
LTD borrowing date rate	$1.44
Dividend rate	$1.45
Historical rate (common stock and APIC)	$1.20

Instructions for both parts a. and b. below:

• Use a negative signwith your answers to indicate a reduction (expenses, cash outflows, etc.).
• Round answers to the nearest whole number.

a. Translate the subsidiary's income statement, statement of retained earnings, balance sheet, and statement of cash flows into $US (assume that the BOY Retained Earnings is $1,845,372).

Retained Earnings	2,929,500		Answer 30
Answer 31Cumulative translation adjustmentEffect of exchange rate on cash			Answer 32
Total Liabilities & Equity	6,146,100		Answer 33
Statement of cash flows:
Net income	630,000		Answer 34
Change in Accounts Receivable	(174,000)	Answer 35	Answer 36
Change in Inventories	(223,500)	Answer 37	Answer 38
Change in Current Liabilities	127,200	Answer 39	Answer 40
Net cash flows from operating activities	359,700		Answer 41
Change in PPE, net	(230,400)	Answer 42	Answer 43
Net cash flows from investing activities	(230,400)		Answer 44
Change in long-term debt	296,400	Answer 45	Answer 46
Dividends	(63,000)	Answer 47	Answer 48
Net cash flows from financing activities	233,400		Answer 49
Net change in cash	362,700		Answer 50
Answer 51Cumulative translation adjustmentEffect of exchange rate on cash			Answer 52
Beginning cash	918,000	Answer 53	Answer 54
Ending cash	1,280,700	Answer 55	Answer 56

b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $1,597,128.

Direct computation of translation adjustment:
Answer 57BOY 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	Answer 58
Net income x EOY -Avg. Exchange rates	Answer 59
Answer 60BOY 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	Answer 61
	Answer 62
Answer 63BOY 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 raetEOY cumulative translation adjustmentTranslation adjustment for the year	Answer 64
EOY Cumulative Translation Adjustment	Answer 65