Shames Company is located in London, England. The local currency Is the British pound (). On January 1, 20X8, Pit Company purchased an 70 percent interest in Shames for $414,000, which resulted in an excess of cost-over-book value of $64,000 due solely to a trademark having a remaining life of 10 years. Pit uses the equity method to account for its Investment. Shames's December 31, 20X8, trial balance has been translated into U.S. dollars, requiring a translation adjustment debit of $6,800. Shames's net income translated Into U.S. dollars is $70,000. It declared and paid a 21,000 dividend on May 1, 20X8. Relevant exchange rates are as follows: January 1, 20x8 May 1, 20x8 December 31, 20x8 Average for 20x8 Required: $ 1-1.60 1-1.64 1-1.65 1-1.63 a. Record the dividend received by Pit from Shames. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete and correct. No A Event 1 General Journal Debit Credit Cash 24,108 Investment in Shames Company 24,108 b. Prepare the entries to record Pit's equity in the net income of Shames and the parent's share of the translation adjustment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete and correct. No Event General Journal A 1 Investment in Shames Company B 2 Income from Shames Company Other comprehensive income -Translation adjustment Investment in Shames Company Debit 49,000 Credit 49,000 4,760 4,760 b. Prepare the entries to record Pit's equity in the net income of Shames and the parent's share of the translation adjustment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete and correct. No Event General Journal A 1 Investment in Shames Company Income from Shames Company B 2 Other comprehensive income -Translation adjustment Investment in Shames Company Debit 49,000 Credit 49.000 4,760 4,760 c. Show a calculation of the differential reported on the consolidated balance sheet of December 31, 20X8, and the translation adjustment from differential. (Amounts to be deducted should be entered with a minus sign. If no entry is required for a transaction/event, select "No journal entry required" In the first account field.) Answer is complete and correct. British pounds Exchange rate U.S. Dollars Income Statement Differential Jan. 1, 20x8 40,000 1.60 $ 84,000 Amortization for 20x8 (4,000) 1.83 (8,520) Remaining balance 38,000 5 57,480 Balance Sheet: Remaining balance on Dec. 31 translated at year-end 38,000 1.65 59,400 rate Difference to translation adjustment $ 1,920 Answer is complete but not entirely correct. No Event General Journal A 1 Investment in Shames Company Other comprehensive income - Translation adjustment Debit Credit 1,920 1,920 d. Record the amortization of the trademark on Pit's books. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. No Event General Journal A 1 Income from Shames Company Investment in Shames Company Debit Credit 6,520 6,520 x e. Calculate the amount of the translation adjustment reported on the statement of comprehensive income as an element of other comprehensive Income. Answer is complete but not entirely correct. Other comprehensive income $ 2,860 debit balance