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
Inventory (FIFO)
Facilities, net
Equipment, net
Capital
Sales
Cost of sales (FIFO)			see (1) below
Operating expenses
Depreciation expense facilities
Depreciation expense equipment
Remeasurement (gain) or loss		--	see (2) below

• 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
Purchases made at year-end
Less ending inventory
Cost of sales

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
Sales
Facilities costs
Equipment purchase
Merchandise purchase
Merchandise purchase
Cash operating expenses
Exposed position, ending
Remeasurement gainRemeasurement loss

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
Inventory
Facilities, net
Equipment, net
Capital
Sales
Cost of goods sold
Operating expenses
Depreciation expense facilities
Depreciation expense equipment
Translation (gain) or loss		--	see (3) below

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
Net income
Exposed position, ending
Translation gainTranslation loss