Kingsfield starts a subsidiary operation in a foreign country on January 1, 2015. The countrys currency is the kumquat (KQ). To start this business, Kingsfield invests 10,000 kumquats. Of this amount, i t spends 3,000 kumquats immediately to acquire equipment. Later, on April 1, 2015, it also purchases land. All subsidiary operational activities occur at an even rate throughout the year. The currency exchange rates for the kumquat for this year follow:

January 1, 2015$1.71

April 1, 20151.59

June 1, 20151.66

Weighted average20151.64

December 31, 20151.62

As of December 31, 2015, the subsidiary reports the following trial balance:

DEBIT CREDIT

Cash KQ 8,000

Accounts receivable 9,000

Equipment 3,000

Accumulated depreciation KQ 600

Land5,000

Accounts payable 3,000

Notes payable (due 2018) 5,000

Common stock 10,000

Dividends declared (6/1/15) 4,000

Sales 25,000

Salary expense 5,000

Depreciation expense 600

Miscellaneous expenses 9,000

Totals KQ43,600 KQ43,600

A corporation based in East Lansing, Michigan, Kingsfield uses the U.S. dollar as its reporting currency.

a.Assume that the subsidiarys functional currency is the kumquat. Prepare a trial balance for it in U.S. dollars so that consolidated financial statements can be prepared.

b.Assume that the subsidiarys functional currency is the U.S. dollar. Prepare a trial balance for it in U.S. dollars so that consolidated financial statements can be prepared.