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$). As of December 31, 2015, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: Main Operation-Canada Debit Credit Accounts payable C$ 11,860 Accumulated depreciation 28,000 Buildings and equipment C$ 168,000 Cash 27,000 Common stock 51,000 Cost of goods sold 204,000 Depreciation expense 7,000 Dividends, 4/1/15 20,000 Gain on sale of equipment, 6/1/15 5,100 Inventory 80,000 Notes payable-due in 2018 70,000 Receivables 69,000 Retained earnings, 1/1/15 136,590 Salary expense 24,000 Sales 313,000 Utility expense 9,100 Branch operation 7,450 Totals C$ 615,550 C$ 615,550 Credit Ps 51,600 19,100 Branch OperationMexico Debit Accounts payable Accumulated depreciation Building and equipment Ps 41,000 Cash 59,500 Depreciation expense 2,100 Inventory (beginning-income statement) 24,000 Inventory (ending-income statement) Inventory (ending-balance sheet) 28,500 Purchases 69,000 Receivables 22,000 Salary expense 9,100 Sales 28,500 125,000 Receivables Salary expense Sales Main office 22,000 9,100 125,000 31,000 Totals Ps 255,200 Ps 255,200 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 2005 when the currency exchange rate was C$0.24 = Ps 1. Purchases should be assumed as having been made evenly throughout the fiscal year. Beginning inventory was acquired evenly throughout 2014; ending inventory was acquired evenly throughout 2015. The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,450 on December 31, 2015. Currency exchange rates for 1 Ps applicable to the Mexican operation follow: Weighted average, 2014 January 1, 2015 Weighted average rate for 2015 December 31, 2015 C$0.29 0.31 0.33 0.34 The December 31, 2014, consolidated balance sheet reported a cumulative translation adjustment with a $37,950 credit (positive) balance. The subsidiary's common stock was issued in 2004 when the exchange rate was $0.46 = C$1. The subsidiary's December 31, 2014, Retained Earnings balance was C$136,590.00, a figure that has been translated into US$69,903. The applicable currency exchange rates for 1 C$ for translation purposes are as follows: US$0.70 0.69 0.68 January 1, 2015 April 1, 2015 June 1, 2015 Weighted average rate for 2015 December 31, 2015 0.67 0.65 a. Remeasure the Mexican operation's figures into Canadian dollars. (Hint: Back into the beginning net monetary asset or liability position.) (Input all amounts as positive values.) Canadian Dollars Debit Credit Accounts payable Accumulated depreciation Building and equipment Cash Depreciation expense Inventory (beginningincome statement) Inventory (endingincome statement) Inventory (ending-balance sheet) Purchases Receivables Salary expense Sales Main office Total 0 0 b. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency and Prepare consolidated financial statement in parent currency (that is U.S. dollars). (Round U.S. Dollar values to 2 decimal places. Amounts to be deducted and losses should be indicated with a minus sign.) SENDELBACH CORPORATION Financial Statements For the Year Ended December 31, 2015 Canadian Dollar U.S. Dollar Income Statement: C$ C$ 0 $ 0.00 C$ O 0.00 Statement of Retained Earnings: Retained earnings, 1/1/15 C$ Retained earnings, 12/31/15 C$ 0 0.00 Balance Sheet: 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$). As of December 31, 2015, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: Main Operation-Canada Debit Credit Accounts payable C$ 11,860 Accumulated depreciation 28,000 Buildings and equipment C$ 168,000 Cash 27,000 Common stock 51,000 Cost of goods sold 204,000 Depreciation expense 7,000 Dividends, 4/1/15 20,000 Gain on sale of equipment, 6/1/15 5,100 Inventory 80,000 Notes payable-due in 2018 70,000 Receivables 69,000 Retained earnings, 1/1/15 136,590 Salary expense 24,000 Sales 313,000 Utility expense 9,100 Branch operation 7,450 Totals C$ 615,550 C$ 615,550 Credit Ps 51,600 19,100 Branch OperationMexico Debit Accounts payable Accumulated depreciation Building and equipment Ps 41,000 Cash 59,500 Depreciation expense 2,100 Inventory (beginning-income statement) 24,000 Inventory (ending-income statement) Inventory (ending-balance sheet) 28,500 Purchases 69,000 Receivables 22,000 Salary expense 9,100 Sales 28,500 125,000 Receivables Salary expense Sales Main office 22,000 9,100 125,000 31,000 Totals Ps 255,200 Ps 255,200 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 2005 when the currency exchange rate was C$0.24 = Ps 1. Purchases should be assumed as having been made evenly throughout the fiscal year. Beginning inventory was acquired evenly throughout 2014; ending inventory was acquired evenly throughout 2015. The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,450 on December 31, 2015. Currency exchange rates for 1 Ps applicable to the Mexican operation follow: Weighted average, 2014 January 1, 2015 Weighted average rate for 2015 December 31, 2015 C$0.29 0.31 0.33 0.34 The December 31, 2014, consolidated balance sheet reported a cumulative translation adjustment with a $37,950 credit (positive) balance. The subsidiary's common stock was issued in 2004 when the exchange rate was $0.46 = C$1. The subsidiary's December 31, 2014, Retained Earnings balance was C$136,590.00, a figure that has been translated into US$69,903. The applicable currency exchange rates for 1 C$ for translation purposes are as follows: US$0.70 0.69 0.68 January 1, 2015 April 1, 2015 June 1, 2015 Weighted average rate for 2015 December 31, 2015 0.67 0.65 a. Remeasure the Mexican operation's figures into Canadian dollars. (Hint: Back into the beginning net monetary asset or liability position.) (Input all amounts as positive values.) Canadian Dollars Debit Credit Accounts payable Accumulated depreciation Building and equipment Cash Depreciation expense Inventory (beginningincome statement) Inventory (endingincome statement) Inventory (ending-balance sheet) Purchases Receivables Salary expense Sales Main office Total 0 0 b. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency and Prepare consolidated financial statement in parent currency (that is U.S. dollars). (Round U.S. Dollar values to 2 decimal places. Amounts to be deducted and losses should be indicated with a minus sign.) SENDELBACH CORPORATION Financial Statements For the Year Ended December 31, 2015 Canadian Dollar U.S. Dollar Income Statement: C$ C$ 0 $ 0.00 C$ O 0.00 Statement of Retained Earnings: Retained earnings, 1/1/15 C$ Retained earnings, 12/31/15 C$ 0 0.00 Balance Sheet