Petra Corporation, a U.S. firm, acquired all the outstanding capital stock of Sitra Corporation, a British firm, on January 1, 2016 for $800,000 when the exchange rate for the British pounds was $1.50 and Sitras stockholders equity consisted of 400,000 capital stock and 100,000 retained earnings. Sitras functional currency is the British pound.

The balance sheet accounts for Sitra at January 1, 2016 in British pounds and U.S. dollars are summarized as follows

	British Pounds	Exchange Rate	U.S. Dollars
Cash	50,000	1.50	75,000
Accounts Receivable - net	60,000	1.50	90,000
Inventories	40,000	1.50	60,000
Equipment	750,000	1.50	1,125,000
Total Assets	900,000		1,350,000
Accumulated depreciation	250,000	1.50	375,000
Accounts payable	150,000	1.50	225,000
Capital stock	400,000	1.50	600,000
Retained earnings	100,000	1.50	150,000
Total liabilities and Equity	900,000		1,350,000

Exchange rates for 2016 are as follows:

Current exchange rate, January 1, 2016 $1.50

Average exchange rate for 2016 $1.53

Rate for cash dividends $1.62

Current exchange rate, Dec. 31, 2016 $1.55

Sitra adjusted trial balance in British pounds at December 31, 2016 is as follows:

Debits

cash 20,000

Accounts receivable net 70,000

Inventories 50,000

Equipment 800,000

Cost of sales 350,000

Depreciation expense 80,000

Operating expenses 100,000

Dividends 30,000

Total Debits 1,500,000

Credits

Accumulated depreciation 330,000

Accounts payable 70,000

Capital stock 400,000

Retained earnings 100,000

Sales 600,000

Total Credits 1,500,000

Required

1. Prepare a translation worksheet to convert Sitras 30 Dec. 31, 2016 adjusted trial balance into U.S. dollar

2. Prepare Journal entries on Petras books to account for the investment in Sitra for 2016

3. Directly compute the translation gain or loss