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Check my wo Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017 by investing capital in the amount of 60.000 pounds. The subsidiary immediately borrowed 140,000 pounds on a five-year note win 10 percent intest payal e annually beginning on January 1, 2018. The subsidiary then purchased for 200,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight line method. Also on January 1, 2017, the subsidiary rented the building for three years to a group of local attorneys for 8.000 pounds per month. By year-end, rent payments totaling 30.000 rounds had been received, and 16,000 pounds was in accounts receivable On October 14,000 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 12,000 pounds back to Sullivan's Island Company on December 31, 2017. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow. 1 Pound January 1, 2017 $2.00 October 1, 2017 2.05 December 31, 2.08 - 2017 Average for 2017 2.04 = 1 1 Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary and then translate these amounts into U.S. dollars. (Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be indicated with minus sign.) SULLIVAN'S ISLAND COMPANY Statement of Cash Flows Pounds Exchange Rate U.S. Dollars Pounds Exchange Rate Dollars Operating Activities: Net income Add: Depreciation expenses Add: Increase in interest payable Less: Increase in accounts receivable 58,000 20,000 14,000 (16,000) 0 76,000 2.04 2.04 2.04 0 120,640 40,800 28,560 (32,640) 0 157,360 $ $ $ $ 2.00 Cash flow from operating activities Investing Activities Purchase of building Cash flow from investing activities Financing Activities Capital contribution Borrowing on note Dividends (200,000) $ (200,000) (400,000) $ (400,000) 60,000 140,000 (12,000) 0 188,000 2.00 2.00 2.08 120,000 280,000 (24,960) 0 375,040 Cash flow from financing activities Increase in cash Effect of exchange rate change on cash 1 of 2 Next >