C$ Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2020, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: Main Operation-Canada Debit Credit Accounts payable C$ 13,860 Accumulated depreciation 29, eee Buildings and equipment 169,280 Cash 28,eee Common stock 52, eee Cost of goods sold 285, 280 Depreciation expense 7,100 Dividends, 4/1/20 21, e80 Gain on sale of equipment, 6/1/20 5,200 Inventory 81, eee Notes payable-due in 2023 71,eee Receivables 7e, eee Retained earnings, 1/1/20 137,590 Salary expense 25, eee Sales 314, eee Utility expense 9,200 Branch operation 7,350 Totals 622,650 622,650 C$ C$ Branch Operation-Mexico Debit PS Credit 54,200 19,200 PS 42,880 60, eee 2,200 25,000 29,000 Accounts payable Accumulated depreciation Building and equipment Cash Depreciation expense Inventory (beginning-income statement) Inventory (ending-income statement) Inventory (ending-balance sheet) Purchases Receivables Salary expense Sales Main office Totals 29,000 70,000 23,000 9,200 126,000 32, eee 260,400 PS 260,400 PS Additional Information The Canadian subsidiary's functional currency is the Canadian dollar, and Sendelbach's reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities. The building and equipment used in the Mexican operation were acquired in 2010 when the currency exchange rate was $0.23 = Ps 1. Purchases of inventory were made evenly throughout the fiscal year. Beginning inventory was acquired evenly throughout 2019, ending inventory was acquired evenly throughout 2020. The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,350 on December 31, 2020 Currency exchange rates for 1 Ps applicable to the Mexican operation follow: C$ Weighted average, 2019 January 1, 2020 Weighted average rate for 2020 December 31, 2020 2.28 2.30 2.32 2.33 The December 31, 2019, consolidated balance sheet reported a cumulative translation adjustment with a $38,950 credit (positive) balance. The subsidiary's common stock was issued in 2007 when the exchange rate was $0.47 = C$1. The subsidiary's December 31, 2019, retained earnings balance was C$137,590, an amount that has been translated into U.S.$69,323. The applicable currency exchange rates for 1 C$for translation purposes are as follows: US$ January 1, 2020 April 1, 2020 June 1, 2020 Weighted average rate for 2020 December 31, 2020 2.70 2.69 2.68 0.67 2.65 a. Remeasure the Mexican operation's account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.) b. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars. c. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements. Canadian Dollars Debit Credit Accounts payable Accumulated depreciation Building and equipment Cash Depreciation expense Inventory (beginningincome statement) Inventory (endingincome statement) Inventory (ending-balance sheet) Purchases Receivables Salary expense Sales Main office Total Canadian Dollar U.S. Dollar Income Statement cs! CS cs Statement of Retained Earnings: Retained earnings 1/1/20 CS Retained earnings 12/31/20 cs Balance Sheet: Assets: cs Total CS Liabilities and Equities: CS C$ Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2020, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: Main Operation-Canada Debit Credit Accounts payable C$ 13,860 Accumulated depreciation 29, eee Buildings and equipment 169,280 Cash 28,eee Common stock 52, eee Cost of goods sold 285, 280 Depreciation expense 7,100 Dividends, 4/1/20 21, e80 Gain on sale of equipment, 6/1/20 5,200 Inventory 81, eee Notes payable-due in 2023 71,eee Receivables 7e, eee Retained earnings, 1/1/20 137,590 Salary expense 25, eee Sales 314, eee Utility expense 9,200 Branch operation 7,350 Totals 622,650 622,650 C$ C$ Branch Operation-Mexico Debit PS Credit 54,200 19,200 PS 42,880 60, eee 2,200 25,000 29,000 Accounts payable Accumulated depreciation Building and equipment Cash Depreciation expense Inventory (beginning-income statement) Inventory (ending-income statement) Inventory (ending-balance sheet) Purchases Receivables Salary expense Sales Main office Totals 29,000 70,000 23,000 9,200 126,000 32, eee 260,400 PS 260,400 PS Additional Information The Canadian subsidiary's functional currency is the Canadian dollar, and Sendelbach's reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities. The building and equipment used in the Mexican operation were acquired in 2010 when the currency exchange rate was $0.23 = Ps 1. Purchases of inventory were made evenly throughout the fiscal year. Beginning inventory was acquired evenly throughout 2019, ending inventory was acquired evenly throughout 2020. The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,350 on December 31, 2020 Currency exchange rates for 1 Ps applicable to the Mexican operation follow: C$ Weighted average, 2019 January 1, 2020 Weighted average rate for 2020 December 31, 2020 2.28 2.30 2.32 2.33 The December 31, 2019, consolidated balance sheet reported a cumulative translation adjustment with a $38,950 credit (positive) balance. The subsidiary's common stock was issued in 2007 when the exchange rate was $0.47 = C$1. The subsidiary's December 31, 2019, retained earnings balance was C$137,590, an amount that has been translated into U.S.$69,323. The applicable currency exchange rates for 1 C$for translation purposes are as follows: US$ January 1, 2020 April 1, 2020 June 1, 2020 Weighted average rate for 2020 December 31, 2020 2.70 2.69 2.68 0.67 2.65 a. Remeasure the Mexican operation's account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.) b. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars. c. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements. Canadian Dollars Debit Credit Accounts payable Accumulated depreciation Building and equipment Cash Depreciation expense Inventory (beginningincome statement) Inventory (endingincome statement) Inventory (ending-balance sheet) Purchases Receivables Salary expense Sales Main office Total Canadian Dollar U.S. Dollar Income Statement cs! CS cs Statement of Retained Earnings: Retained earnings 1/1/20 CS Retained earnings 12/31/20 cs Balance Sheet: Assets: cs Total CS Liabilities and Equities: CS