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$). As of December 31, 2017, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: Main Operation-Canada Debit Credit Accounts payable C$ 21,695 Accumulated depreciation 33,000 Buildings and equipment C$ 173,000 Cash 32,000 Common stock 56,000 Cost of goods sold 209,000 Depreciation expense 7,500 Dividends, 4/1/17 25,000 Gain on sale of equipment, 6/1/17 5,600 Inventory 85,000 Notes payable-due in 2020 75,000 Receivables 74,000 Retained earnings, 1/1/17 141,590 Salary expense 29,000 Sales 318,000 Utility expense 9,680 Branch operation 6,785 Totals C$ 650,885 C$ 650,885 Ps Credit 53,100 20,100 Branch OperationMexico Debit Accounts payable Accumulated depreciation Building and equipment Ps 46,000 Cash 62,000 Depreciation expense 2,600 Inventory (beginning-income statement) 29,000 Inventory (ending-income statement) Inventory (ending-balance sheet) 31,000 Purchases 63,000 Receivables 27,000 Salary expense 9,600 Sales Main office Totals Ps 270, 200 31,000 130,000 36,000 Ps 270, 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 2007 when the currency exchange rate was C$0.19 = Ps 1. Purchases of inventory were made evenly throughout the fiscal year. Beginning inventory was acquired evenly throughout 2016; ending inventory was acquired evenly throughout 2017. The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$6,785 on December 31, 2017 Currency exchange rates for 1 Ps applicable to the Mexican operation follow: Weighted average, 2016 January 1, 2017 Weighted average rate for 2017 December 31, 2017 C$ 0.24 0.26 0.28 0.29 The December 31, 2016, consolidated balance sheet reported a cumulative translation adjustment with a $42,950 credit (positive) balance. The subsidiary's common stock was issued in 2004 when the exchange rate was $0.51 = C$1. The subsidiary's December 31, 2016, retained earnings balance was C$141,590, an amount that has been translated into U.S.$66,803. The applicable currency exchange rates for 1 C$ for translation purposes are as follows: January 1, 2017 April 1, 2017 June 1, 2017 Weighted average rate for 2017 December 31, 2017 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. Canadian Dollars Debit Credit 11 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 SENDELBACH CORPORATION Financial Statements U.S. Dollar For the Year Ended December 31, 2017 Canadian Dollar Income Statement: cs cs 0 $ 0.00 cs 0 s 0.00 Statement of Retained Earnings: Retained earnings. 1/1/15 cs Retained earnings. 12/31/15 cs 0 s 0.00 Balance Sheet: Assets: cs CS s 0.00 Total Liabilities and Equities: cs Total cs S 0.00