Publix Inc., a U.S.-based grocery store, established a subsidiary in Mexico (Calimax S.A.) by investing Mex$25,000,000 on January 1, 2012, when the exchange rate was $0.25 per Mex$. The financial statements of Calimax as of December 31, 2013, two years later, are as follows:

Balance Sheet

December 31, 2013

Assets

Cash.. 1,000,000

Accounts receivable (net).. 1,650,000

Inventory. 4,250,000

Equipment.... 12,500,000

Less: Accumulated depreciation .. (2,250,000)

Building 36,000,000

Less: Accumulated depreciation ... (3,300,000)

Land... 3,000,000

Total assets.. 52,850,000

Liabilities and Stockholders Equity Current liabilities 3,100,000

Long-term debt 22,000,000

Capital stock. 25,000,000

Retained earnings 2,750,000

Total liabilities and stockholders equity 52,850,000

Statement of Income

For the Year Ending December 31, 2013

Sales.. 14,000,000

Cost of goods sold... (6,000,000)

Gross profit.. 8,000,000

Depreciation expense equipment... (1,250,000)

Depreciation expense building... (1,800,000)

Other expenses (850,000)

Income before tax .. 4,100,000

Tax..... (850,000)

Net income... 3,250,000

Statement of Retained Earnings

For the Year Ending December 31, 2013

Retained earnings, 1/1/2013.. 250,000

Plus: Net Income, 2013. 3,250,000

Less: Dividends, 12/15/2013....... (750,000)

Retained earnings, 12/31/2013.. 2,750,000

Additional Information: The January 1, 2013 beginning inventory of Mex$3,000,000 was acquired on December 15, 2012, when the exchange rate was $0.23. Purchases of inventory during 2013 were acquired uniformly throughout the year. The December 31, 2013 ending inventory of Mex$4,250,000 was acquired evenly throughout the fourth quarter of 2013, when the average exchange rate was $0.175.

All fixed assets were acquired on January 1, 2012 except for Mex$2,500,000 of equipment and Mex$6,000,000 of building which were both acquired on January 1, 2013, when the exchange rate was $0.20. Equipment is depreciated on a straight-line basis over 10 years. Buildings are depreciated on a straight-line basis over 20 years. Dividends were declared on December 15, 2013, when the exchange rate was $0.17.

Other relevant exchange rates are as follows. The average exchange rate for 2013 was $0.18 and the exchange rate on December 31, 2013 was $0.16.

Required:

1. Assuming that Calimaxs functional currency is the Mexican peso, translate Calimaxs financial statement into U.S. dollars at December 31, 2013. Retained earnings appeared in Calimaxs translated financial statements on December 31, 2012 were $56, 250.

2. Assuming that Calimaxs functional currency is the U.S. dollar, remeasure Calimaxs financial statement into U.S. dollars at December 31, 2013. Retained earnings appeared in Calimaxs translated financial statements on December 31, 2012 were $882, 500.