pn 1/1/19, Paper Corporation purchased 100 percent of Simple Company at a cost of $900,000. Paper is a U.S.-based company and Simple is in Cairo, Egypt. Paper uses the equity method to account for its investment in Simple. Simple had 400,000 LE Common Stock, 300,000 LE APIC, and 600,000 LE retained earnings at the acquisition date. Any fair value/book value difference is attributable to a patent with a 10-year life. During 2019, the first year of joint operation, Simple reported income of 500,000 Egyptian pounds (LE) which was earned evenly throughout the year. And paid a dividend of 100,000 LE to Paper on June 1. Simple's functional currency is the Egyptian pound. The exchange rates for 1 LE are as follows: 1/1/19 $.48 6/1/19 $.51 $.52 Weighted average 2019 12/31/19 $.55 $.57 6/1/20 (dividend date) $.58 Weighted average 2020 12/31/20 $.61 1. Show that the beginning 2020 Investment in Simple balance on Paper's books is: $1,219.625. (Hint: you will need to translate Simple's income and dividends as well as compute the change in OCI for the year). 2. Prepare the translated financial statements of Simple assuming the equipment sales occurred on 6/1/20. 3. Prepare the consolidation entries and worksheet for Paper and Simple. Paper/Simple Pre-transaction Consolidation financials 12/31/20 Paper Simple ($) Egyp Pounds Sales 2,000,000 1,750,000 Cost of goods sold -1,200,000 -860,000 Salary Expense -200,000 - 150,000 Rent Expense -20,000 -95,000 Other Expense -21,500 -60,000 Gain on sales of fixed assets 30,000 Investment income-Simple ? Net Income ? 615,000 Retained Earnings 1/1/20 ? 1,000,000 Net Income ? 615,000 Dividends 50,000 70,000 Retained Earnings 12/31/20 ? 1,545,000 Cash and Receivables 500,000 400,000 Inventory 400,000 640,000 Prepaid Items 70,000 0