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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 2,940,000 Cost of Goods Sold (1,540,000) Depreciation Expense (314,000 ) Other Expenses (368,000) Net Income 718,000 1/1 Retained Earnings 925,000 1,643,000 Less: Dividends Declared and Paid, December 31 (356,000) 12/31 Retained Earnings 1,287,000 LANSING COMPANY Balance Sheet December 31, 2014 Cash and Receivables 1,310,000 Inventory 459,000 Property, Plant, and Equipment 3,520,000 Total 5,289,000 Current Liabilities 642,000 Long-Term Notes Payable 1,190,000 Common Stock 2,170,000 Retained Earnings 1,287,000 Total 5,289,000 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 January 1, 2008 Average for the last quarter 2013 January 1, 2014 December 31, 2014 Average for 2014 Average for August-December 2014 $1.8996 1.8365 1.5300 1.4919 1.4730 1.4788 1.4950 The January 1, 2014, retained earnings balance of Lansing in dollars was $1,637,669, and the cumulative translation adjustment was a debit balance of $931,420. The beginning inventory of 396,000 was acquired during the last quarter of 2013 and the ending inventory was acquired during the last five months of 2014. Sales were made and purchases and other expenses were incurred evenly during the year. Translate the December 31, 2014, account balances of Lansing Company into dollars assuming that the pound is the functional currency of Lansing Company. (Round answers to 0 decimal places, e.g. 5,125. Enter loss and debit cumulative translation adjustment using either a negative sign preceding the number e.g. -2,945 or parentheses e.g. (2,945).) Adjusted Trial Balance () Translation Rate Adjusted Trial Balance ($) Consolidated Income and Retained Earnings Statement $ V V Cost of Goods Sold Depreciation Expenses Dividends Net Income / (Loss) Net Income to Retained Earnings Other Expenses Retained Earnings - 1/1 Retained Earnings - 12/31 Sales Total Cost & Expenses Total Revenues Balance Sheet Total List Of Accounts Exercise 13-7 Accounts Payable Accounts Receivable Accumulated Depreciation Additional Paid-in Capital Amortization Bonds Payable Buildings Cash and Receivables Common Stock Cost of Goods Sold Cumulative Translation Adjustment Current Liabilities Depreciation Expense Difference Between Implied and Book Value Dividend Income Dividends Declared Equity in Subsidiary Income Goodwill Income Tax Expense Inventory Investment in Subsidiary Company Land Long-term Notes Payable Marketable Securities No Entry Noncontrolling Interest Operating Expenses Other Expense Patent Preferred Stock Prepaid Rent Property, Plant, and Equipment Purchases Retained Earnings Sales Short-term Notes Payable Translation Loss Unamortized Premium on Bonds Payable