Q.3

Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 63,000 pounds. The subsidiary Immediately borrowed 130,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 193,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,000 pounds per month. By year-end, rent payments totaling 80,000 pounds had been received, and 16,000 pounds was in accounts receivable. On October 1, 2020, 4,200 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 14,000 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: January 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 $ 3.40 - 1 Pound 3.45 - 1 3.48 - 1 3.44 - 1 ances Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary, and then translate this statement into U.S. dollars. (Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be Indicated with minus sign.) SULLIVAN'S ISLAND COMPANY Statement of Cash Flown Pounds Exchange Rate U.S. Dollars Operating Activities Cash flow from operating activos Investing Activities MC Graw Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary, and then translate this statement into U.S. dollars. (Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be Indicated with minus sign.) SULLIVAN'S ISLAND COMPANY Statement of Cash Flows Pounds Exchange Rate U.S. Dollars Operating Activities Cash flow from operating activities Investing Activities as Cash flow from investing activities Financing Activities: Cash flow from financing activities Effect of exchange rate change on cash Beginning balance in cash Ending balance in cash