REQUIREMENTS A B & C

Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2020, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: Credit C$ 49,915 46,000 69,000 Main Operation-Canada Debit Accounts payable Accumulated depreciation Buildings and equipment C$ 186,000 Cash 45,000 Common stock Cost of goods sold 222,000 Depreciation expense 8,800 Dividends, 4/1/20 38,000 Gain on sale of equipment, 6/1/20 Inventory 98,000 Notes payable-due in 2023 Receivables 87,000 Retained earnings, 1/1/20 Salary expense 42,000 Sales Utility expense 10,900 Branch operation 7,705 Totals C$ 745, 405 6,900 88,000 154,590 331,000 C$ 745, 405 Credit Ps 71,900 44,400 Branch Operation Mexico Debit Accounts payable Accumulated depreciation Building and equipment Ps 59,000 Cash 68,500 Depreciation expense 3,900 Inventory (beginning-income statement) 42,000 Inventory (ending-income statement) Inventory (ending-balance sheet) 37,500 Purchases 76,000 Receivables 40,000 Salary expense 10,900 Sales Main office Totals Ps 337,800 37,500 143,000 41,000 Ps 337,800 Additional Information The Canadian subsidiary's functional currency is the Canadian dollar, and Sendelbach's reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities. The building and equipment used in the Mexican operation were acquired in 2010 when the currency exchange rate was C$0.17 = Ps 1. Purchases of inventory were made evenly throughout the fiscal year. Beginning inventory was acquired evenly throughout 2019; ending inventory was acquired evenly throughout 2020. The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,705 on December 31, 2020. Currency exchange rates for 1 Ps applicable to the Mexican operation follow: Weighted average, 2019 January 1, 2020 Weighted average rate for 2020 December 31, 2020 C$ 0.22 0.24 0.26 0.27 The December 31, 2019, consolidated balance sheet reported cumulative translation adjustment with a $55,950 credit (positive) balance. The subsidiary's common stock was issued in 2007 when the exchange rate was $0.48 = C$1. The subsidiary's December 31, 2019, retained earnings balance was C$154,590, an amount that has been translated into U.S.$67,443. The applicable currency exchange rates for 1 C$ for translation purposes are as follows: January 1, 2020 April 1, 2020 June 1, 2020 Weighted average rate for 2020 December 31, 2020 US$ 0.70 0.69 0.68 0.67 0.65 a. Remeasure the Mexican operation's account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.) b. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars. c. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements