Remeasured and Translated Trial Balance

On January 2, 2019, Maddox Corporation, headquartered in the U.S., established a wholly-owned subsidiary in Mexico City. An initial investment of P10,000,000 was made on that date; the exchange rate was $0.05/peso. During 2019, the following cash transactions occurred at the Mexico City subsidiary. All amounts are in pesos (P).

Facilities costs (January 2; 5-year life)	P1,000,000
Purchase of office equipment (April 1; 10-year life)	300,000
Sales	12,000,000
Merchandise purchases	9,000,000
Operating expenses	3,000,000

The exchange rate was $0.06/P in April when the office equipment and P3,000,000 of merchandise were purchased. Sales, other merchandise purchases, and operating expenses were assumed to have been made or incurred at an average exchange rate of $0.07/P. At year-end, the exchange rate was $0.08/P and the ending inventory (FIFO) amounted to P2,000,000, purchased when the exchange rate was $0.07/P. All depreciation and amortization is straight-line.

Required

a. Prepare the preclosing trial balance for the Mexico City subsidiary as of December 31, 2019, in U.S. dollars, the subsidiarys functional currency.

• Use negative signs with your Cr (credit balance) answers, in the P Dr(Cr) and $ Dr(Cr) columns only.
• Enter answers using all zeros (do not abbreviate answers to millions or thousands).

December 31, 2019 Remeasured Trial Balance		P Dr (Cr)	$/P	$ Dr (Cr)
Cash		Answer	Answer	Answer
Inventory (FIFO)		Answer	Answer	Answer
Facilities, net		Answer	Answer	Answer
Equipment, net		Answer	Answer	Answer
Capital		Answer	Answer	Answer
Sales		Answer	Answer	Answer
Cost of sales (FIFO)		Answer	see (1) below	Answer
Operating expenses		Answer	Answer	Answer
Depreciation expense facilities		Answer	Answer	Answer
Depreciation expense equipment		Answer	Answer	Answer
Remeasurement (gain) or loss		--	see (2) below	Answer
		Answer		Answer

• Do not use negative signs with any of your answers below.
• Enter answers using all zeros (do not abbreviate answers to millions or thousands).

(1) Cost of sales		P	$/P	$
Purchases made in April		Answer	Answer	Answer
Purchases made at year-end		Answer	Answer	Answer
Less ending inventory		Answer	Answer	Answer
Cost of sales				Answer

Instructions for Remeasurement Gain or Loss table:

1. Use negative signs with answers to indicate a negative exposed position balance.
2. Use negative signs with answers to indicate an amount that reduces the exposed position balance.
3. Using the drop-down menu, select the appropriate answer to indicate a remeasurement gain or remeasurement loss.
4. Do not use a negative sign with your remeasurement gain or remeasurement loss answer.
5. Enter answers using all zeros (do not abbreviate answers to millions or thousands).

(2) Remeasurement Gain or Loss		P	$/P	$
Exposed position, beginning		Answer	Answer	Answer
Sales		Answer	Answer	Answer
Facilities costs		Answer	Answer	Answer
Equipment purchase		Answer	Answer	Answer
Merchandise purchase		Answer	Answer	Answer
Merchandise purchase		Answer	Answer	Answer
Cash operating expenses		Answer	Answer	Answer
				Answer
Exposed position, ending		Answer	Answer	Answer
AnswerRemeasurement gainRemeasurement loss				Answer

b. Now assume the subsidiarys functional currency is the peso. Prepare the subsidiarys December 31, 2019, preclosing trial balance, in U.S. dollars.

• Use negative signs with your Cr (credit balance) answers, in the P Dr(Cr) and $ Dr(Cr) columns only.
• Enter answers using all zeros (do not abbreviate answers to millions or thousands).

December 31, 2019 Translated Trial Balance		P Dr (Cr)	$/P	$ Dr (Cr)
Cash		Answer	Answer	Answer
Inventory		Answer	Answer	Answer
Facilities, net		Answer	Answer	Answer
Equipment, net		Answer	Answer	Answer
Capital		Answer	Answer	Answer
Sales		Answer	Answer	Answer
Cost of goods sold		Answer	Answer	Answer
Operating expenses		Answer	Answer	Answer
Depreciation expense facilities		Answer	Answer	Answer
Depreciation expense equipment		Answer	Answer	Answer
Translation (gain) or loss		--	see (3) below	Answer
		Answer		Answer

Instructions for Translation Gain or Loss table:

1. Use negative signs with answers to indicate a negative exposed position balance.
2. Use negative signs with answers to indicate an amount that reduces the exposed position balance.
3. Using the drop-down menu, select the appropriate answer to indicate a translation gain or translation loss.
4. Do not use a negative sign with your translation gain or translation loss answer.
5. Enter answers using all zeros (do not abbreviate to millions or thousands).

(3) Translation Gain or Loss		P	$/P	$
Exposed position, beginning		Answer	Answer	Answer
Net income		Answer	Answer	Answer
				Answer
Exposed position, ending		Answer	Answer	Answer
AnswerTranslation gainTranslation loss