b. Using the information from part a, complete it to prepare the foreign subsidiary's converted (in U.S. dollars) financial statements for 20X2 assuming that the Functional Currency = U.S. Dollars. RE 12/31 BALANCE SHEET Assets: Total Assets Liabilities: Owners' Equity: Total Liabilities & Owners' EquityAssume that XYZ Company purchased a 100%% interest in a foreign subsidiary on 1/1/20*2. There have been no changes in the common stock since the acquisition on 1/1/20%2. The only change in buildings since acquisition has been depreciation. The equipment was purchased on 7/1/20X2. The subsidiary is using a 10-year life and has taken a half year of depreciation for 2012. The accounts receivable were derived from sales that took place throughout 20*2. The note payable was issued on 1/1/20%2. Inventory is calculated on a FIFO basis. The ending inventory was purchased in the last quarter of 20*2. Purchases of inventory amounting to 200,000 pounds took place evenly throughout the year. Dividends were paid on 7/1/20X2. The following is a list of exchange rates for British Pounds; Pounds U.S.$ 1/1/20X2 1 pound Equals $ 1.60 12/31/20X2 1 pound Equals $ 1.70 Average 20X2 1 pound Equals $ 1.65 Average 4th quarter 20%2 1 pound Equals $ 1.68 7/1/20X2 1 pound Equals $ 1.66Balance Sheet as on 12/31 Rate of Conversion Closing (Usd) Income statement Debits Rate of Conversion Usd Cash 100000 1.7 170000 Sales 350000 1.65 577500 Account Receivable 50000 1.7 85000 Inventory 55000 1.7 93500 less Cost of Sales 150000 1.65 247500 Buildings 200000 1.7 340000 less Depreciation expense-Building 10000 1.65 16500 Equipment 80000 1.7 136000 less Depreciation expense-Equipment 4000 1.65 6600 Total 824500 less Other Operating expenses 25000 1.65 41250 Credit Accumulated Dep-Building 20000 1.7 34000 Net Income 161000 1.65 265650 Accumulated Dep-Building 4000 1.7 5800 Wn1 Notes Payable 40000 1.7 68000 Retained Earnings 90000 1.7 153000 Common stock 200000 1.7 340000 Less Dividends 30000 1.7 51000 Retained Earnings Wn1 367650 add Net Income 265650 Foreign Currency Transalation Diiference 8050 Closing Retained Earnings 367650 Total 824500