Exercise 13-7

Dorsey Corporation purchased 90% of the common stock of Lansing Company on January 1, 2008. The cost of the investment was equal to the book value interest acquired. Lansing Company operates two retail stores and an exporting business in London that specializes in buying and selling British tweeds. The subsidiary provided the following financial statements in pounds to the parent company:

LANSING COMPANY Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2014
Sales		3,010,000
Cost of Goods Sold		(1,400,000	)
Depreciation Expense		(317,000	)
Other Expenses		(439,000	)
Net Income		854,000
1/1 Retained Earnings		939,000
		1,793,000
Less: Dividends Declared and Paid, December 31		(328,000	)
12/31 Retained Earnings		1,465,000

LANSING COMPANY Balance Sheet December 31, 2014
Cash and Receivables		1,240,000
Inventory		477,000
Property, Plant, and Equipment		3,740,000
Total		5,457,000
Current Liabilities		862,000
Long-Term Notes Payable		1,290,000
Common Stock		1,840,000
Retained Earnings		1,465,000
Total		5,457,000

Lansing Company was incorporated on January 1, 2006, at which time all the property, plant, and equipment was purchased. The long-term notes were issued to partially finance the purchase of the fixed assets. Direct exchange rates for the British pound are as follows:

January 1, 2006		$1.8996
January 1, 2008		1.8365
Average for the last quarter 2013		1.5300
January 1, 2014		1.4919
December 31, 2014		1.4730
Average for 2014		1.4788
Average for AugustDecember 2014		1.4950

The January 1, 2014, retained earnings balance of Lansing in dollars was $1,662,456, and the cumulative translation adjustment was a debit balance of $945,972. The beginning inventory of 417,000 was acquired during the last quarter of 2013 and the ending inventory was acquired during the last five months of 2014. Sales were made and purchases and other expenses were incurred evenly during the year. Translate the December 31, 2014, account balances of Lansing Company into dollars assuming that the pound is the functional currency of Lansing Company. (Round answers to 0 decimal places, e.g. 5,125. Enter loss and debit cumulative translation adjustment using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).)

January 1, 2014 December 31, 2014 Average for 2014 Average for August-December 2014 1.4730 1.4788 1.4950 The January 1, 2014, retained earnings balance of Lansing in dollars was $1,662,456, and the cumulative translation adjustment was a debit balance of $945,972 made and purchases and other expenses were incurred evenly during the year. Translate the December 31, 2014, account balances of Lansing Company into dollars assuming that the pound is the functional currency of Lansing Company. (Ro -2,945 or parentheses e.g. (2,945).) Adjusted Translation Adjusted Tral Balance (1) Rate Trial Balance (5) Consolidated Income and Retained Earnings Statement V Balance Sheet Total SHOW LIST OF ACCOUNTS LINK TO TEXT Type here to search BI CH HE E