On January 1, 20X1, Popular Creek Corporation organized RoadTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 63,000. RoadTimes December 31, 20X1, trial balance in SFr is as follows:

Debit

Credit

Cash

SFr

7,400

Accounts Receivable (net)

21,000

Receivable from Popular Creek

6,200

Inventory

28,000

Plant & Equipment

101,000

Accumulated Depreciation

SFr

10,500

Accounts Payable

12,200

Bonds Payable

54,500

Common Stock

63,000

Sales

159,700

Cost of Goods Sold

74,500

Depreciation Expense

10,500

Operating Expense

33,500

Dividends Paid

17,800

Total

SFr

299,900

SFr

299,900

Additional Information
1.	The receivable from Popular Creek is denominated in Swiss francs. Popular Creeks books show a $5,200 payable to RoadTime.
2.	Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.
3.	Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full years depreciation is taken in the year of acquisition. The equipment was acquired on March 1.
4.	The dividends were declared and paid on November 1.
5.	Exchange rates were as follows:

SFr

$

January 1

1

=

0.73

March 1

1

=

0.74

November 1

1

=

0.77

December 31

1

=

0.80

20X1 average

1

=

0.75

6.	The Swiss franc is the functional currency.

Required:

a.	Prepare a proof of the translation adjustment.