Kerry Manufacturing Company is a German subsidiary of a U.S. company. Kerry records its operations
and prepares financial statements in euros. However, its functional currency is the British pound.
Kerry was organized and acquired by the U.S. company on June 1, 20X4. The cumulative translation
adjustment as of December 31, 20X6, was $79,860. The value of the subsidiary's retained earnings expressed
in British pounds and U.S. dollars as of December 31, 20X7, was 365,000 pounds and $618,000, respectively.
On March 1, 20X7, Kerry declared a dividend of 120,000 euros. The trial balance of Kerry in euros as of
December 31, 20X7, is as follows:
	Debit	Credit
Cash	240,000
Accounts Receivable (net)	2,760,000
Inventory (at cost)	3,720,000
Marketable Securities (at cost)	2,040,000
Prepaid Insurance	210,000
Depreciable Assets	8,730,000
Accumulated Depreciation		1,417,000
Cost of Goods Sold	17,697,000
Selling, General, and
Administrative Expense	4,762,000
Sales Revenue		26,430,000
Investment Income		180,000
Accounts Payable		2,120,000
Unearned Sales Revenue		960,000
Loans and Mortgage Payable		5,872,000
Common Stock		1,500,000
Paid-in Capital in Excess of Par		210,000
Retained Earnings		1,470,000
Total	40,159,000	40,159,000
The marketable securities were acquired on November 1, 20X6, and the prepaid insurance was acquired on
December 1, 20X7. The cost of goods sold and the ending inventory are calculated by the weighted-average
method.
The following items are measured in pound at the December 31, 20x7.
	Euros	Pounds
Accumulated depreciation
Depreciable Assets	8,730,000	2,671,380
Cost of Goods Sold	17,697,000	5,262,294
Selling, General, Admin. Expense	4,762,000	1,415,886
Accumulated Depreciation	1,417,000	773,915
Sales Revenue	26,430,000	7,866,030
On November 1, 20X6, Kerry received a customer prepayment valued at 3,000,000 euros. On February 1,					3000000
20X7, 2,040,000 euros of the prepayment was earned. The balance remains unearned as of December 31,					2040000
20X7.					960000
Relevant exchange rates are as follows:
	Pounds/Euro	$/Pound
June 1, 20X4	0.31	$1.60
March 1, 20X6	0.3	$1.64
November 1, 20X6	0.305	$1.65
December 31, 20X6	0.31	$1.68
February 1, 20X7	0.302	$1.67
March 1, 20X7	0.3	$1.66
December 1, 20X7	0.29	$1.64
December 31, 20X7	0.288	$1.64
20X7 average	0.297	$1.66
Required:
Prepare a remeasured and translated trial balance of the Kerry Manufacturing
Company as of December 31, 20X7.
ANS:
Kerry Manufacturing Company
Trial Balance Translation
December 31, 20X7
		Relevant		Relevant
		Exchange		Exchange
	Balance in	Rate	Balance in	Rate	Balance in
Account	Euros	(Pds/Euros)	Pounds	($/Pds)	Dollars
Cash	240,000
Accounts Receivable (net)	2,760,000
Inventory (at cost)	3,720,000
Marketable Securities (at cost)	2,040,000
Prepaid Insurance	210,000
Depreciable Assets	8,730,000
Cost of Goods Sold	17,697,000
Selling, General, Admin. Expense	4,762,000
Exchange Loss
Total Debits	40,159,000		12,183,001		20,117,316
Accumulated Depreciation	1,417,000
Sales Revenue	26,430,000
Investment Income	180,000
Accounts Payable	2,120,000
Unearned Sales Revenue	960,000
Loans and Mortgage Payable	5,872,000
Common Stock	1,500,000
Paid-in Capital in Excess of Par	210,000
Retained Earnings	1,470,000
Cumulative Translation
Adjustment			0		-19,392
Total Credits	40,159,000		12,183,001		20,117,316