On January 1, 20X1, Kiner Company formed a foreign subsidiary that issued all of its currently outstanding common stock on that date. Selected accounts from the balance sheets, all of which are shown in local currency units, are as follows: December 31 20x2 20x1 LCU 39,000 70,000 LCU 34,000 65,000 Accounts Receivable (net of allowance for uncollectible accounts of 1,200 LCU on December 31, 20x2, and 1,000 LCU on December 31, 20X1) Inventories, at cost Property, Plant & Equipment (net of allowance for accumulated depreciation of 35, 400 LCU on December 31, 20x2, and 16,000 LCU on December 31, 20X1) Long-Term Debt Common Stock, authorized 24,000 shares, par value 10 LCU per share; issued and outstanding, 12,000 shares on December 31, 20x2, and December 31, 20x1 182,600 100,000 168,000 120,000 120,000 120,000 Additional Information: 1. Exchange rates are as follows: January 1, 20X1-July 31, 20X1 August 1, 20x1-October 31, 20x1 November 1, 20X1-June 30, 20X2 July 1, 20X2-December 31, 20X2 Average monthly rate for 20X1 Average monthly rate for 20x2 LCU 2.0 = 1.8 = 1.7 = 1.5 = 1.9 = 1.6 - $ 1 1 1 1 1 1 2. An analysis of the accounts receivable balance is as follows: 20X2 20x1 LCU 35,000 Accounts Receivable: Balance at beginning of year Sales (43,000 LCU per month in 20x2 and 38,000 LCU per month in 20X1) Collections Write-offs (May 20X2 and December 20X1) Balance at end of year 516,000 (508, 100) (2,700) LCU 40,200 LCU 456,000 (419,500) (1,500) LCU 35,000 20x2 20xi Allowance for Uncollectible Accounts: Balance at beginning of year Provision for uncollectible accounts Write-offs (May 20x2 and December 20X1) Balance at end of year LCU 1,000 2,900 (2,700) LCU 1,200 LCU 2,500 (1,500) LCU 1,000 3. An analysis of inventories, for which the first-in, first-out inventory method is used, follows: 20x1 Inventory at beginning of year Purchases (June 20x2 and June 20x1) Goods available for sale Inventory at end of year Cost of goods sold 20x2 LCU 65,000 355,000 LCU420,000 (70,000) LCU350,000 LCU395,000 LCU395,000 (65,000) LCU330,000 4. On January 1, 20X1, Kiner's foreign subsidiary purchased land for 24,000 LCU and plant and equipment for 160,000 LCU. On July 4, 20X2, additional equipment was purchased for 34,000 LCU. Plant and equipment is being depreciated on a straight-line basis over a 10-year period with no residual value. A full year's depreciation is taken in the year of purchase. 5. On January 15, 20X1, 7 percent bonds with a face value of 120,000 LCU were issued. These bonds mature on January 15, 20X7, and the interest is paid semiannually on July 15 and January 15. The first interest payment was made on July 15, 20X1. Required: Prepare a schedule remeasuring the selected accounts into U.S. dollars for December 31, 20X1, and December 31, 20X2, respectively, assuming the U.S. dollar is the functional currency for the foreign subsidiary. The schedule should be prepared using the following form: (Round your dollar amounts to nearest whole dollar.) KINER COMPANY'S FOREIGN SUBSIDIARY Remeasurement of Selected Captions into United States Dollars December 31, 20x2, and December 31, 20X1 Balance in Indirect Exchange Remeasured into LCUS Rate U.S. Dollars December 31, 20X1: Accounts receivable (net) 34,000 Inventories, at cost 65,000 Property, plant, and equipment (net) 168,000 Long-term debt 120,000 Common stock 120,000 December 31, 20X2: Accounts Receivable (net) 39,000 Inventories, at cost 70,000 Property, plant, and equipment (net) 182,600 Long-term debt 100,000 Common stock 120,000 b. Assume that Pirate uses the fully adjusted equity method. Record all journal entries that relate to its investment in the Norwegian subsidiary during 20X5. Provide the necessary documentation and support for the amounts in the journal entries, including a schedule of the translation adjustment related to the differential. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet General Journal Credit No 1 Date January 01 Debit 158,400 Investment in Ship Company Cash 158,400 2 July 01 9,690 9,690 December 31 Income from subsidiary December 31 Other Comprehensive Income - Translation adjustment December 31 No Transaction Recorded 6 December 31 No Transaction Recorded c. Prepare a schedule that determines Pirate's consolidated comprehensive income for 20X5. (Amounts to be deducted should be indicated with a minus sign.) $ 239,000 Income from Pirate's operations for 20X5, exclusive of income from the Norwegian subsidiary Add: Income from the Norwegian subsidiary Deduct: Amortization of differential Pirate's Net Income Add: Translation adjustment Pirate's Consolidated Comprehensive Income $ 239,000 $ 239,000 d. Compute Pirate's total consolidated stockholders' equity at December 31, 20X5. Consolidated stockholders' equity