Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gramado Company was created as a wholly owned subsidiary of Porto Corporation (a US based company) on January 1, 2020. On that date, Porto invested

image text in transcribed
image text in transcribed
Gramado Company was created as a wholly owned subsidiary of Porto Corporation (a US based company) on January 1, 2020. On that date, Porto invested $50,000 in Gramado's capital stock. Given the exchange rate on that date of 0.84 Cruzeiro (Cz) per USD. Gramado's opening balance sheet (in Cz) was as follows: Cz Cash Inventory Total Assets Balance Sheet January 1, 2020 Cz 20,000 22,000 Capital Stock 42,000 Total liabilities and Equity 42,000 42.000 Relevant USD exchange rates for the Cz for Years 1 and 2 are as follows: January 1, 2020 0.84 Cz/$ Average for 2020 0.80 Cz/S Rate when PPE were acquired and long-term debt was 0.82 Cz/$ incurred on Jan 10, 2020 Rate when capital was increased Feb 25, 2020 0.83 Cz/$ Rate when dividends were declared. Dec 1, 2020 0,78 Cz/S Average for the month of December 2020 0.76 Cz/$ December 31, 2020 0.75 Cz/$ Gramado's Cz denominated financial statements for the year ended December 31, 2020 are as follows: Income statement 2020 Cz Sales 540,000 COGS (310,000) Selling and administrative expenses (93,000) Depreciation expense (10,000) Interest expense (5,000) Income before tax 122,000 Income taxes (40,000) Net income 82,000 Statement of Retained Earnings 2020 Cz Retained carnings, 1/1/2020 0 Net income 82,000 Dividends (declared on 1/12/2020) (20,000) Retained earnings, 12/31/2020 62,000 Balance sheet December 31, 2020 Cash A/R Inventory (1) Plant and equipment Less: acc. depn Total asset Account payable Long-term Debt Capital stock (2) Retained earnings, 12/31/2020 Total liabilities and stockholders' equity Cz 30,000 20,000 72,000 100,000 (10,000) 212,000 30,000 65,000 55,000 62.000 212,000 Additional information: (1) Inventory is carried at FIFO cost. Opening inventory was purchased on Jan 1, 2020. Ending inventory was acquired evenly throughout the month of December. (2) 13,000 Cz additional capital was raised on Feb 25, 2020 Required: Please choose one of the following 4.1 Applying for students with ODD student ID numbers Translate Gramado Cz denominated financial statements into USD, assuming that Cz is the primary currency that Gramado uses in its day-to-day operations

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Managers Interpreting Accounting Information For Decision Making

Authors: Paul M. Collier

3rd Edition

0470777648, 9780470777640

More Books

Students also viewed these Accounting questions