Shoe Inc., a US Company, established a subsidiary in a foreign country on January 1, year 1 by investing $10,000 when the ZAR (FC) was $.84/ZAR. Shoe Inc. negotiated with a bank for a loan of 4,000 ZAR on January 5, year 1 and purchased plant and equipment in the amount of 9,000 ZAR. Additional exchange rates for the ZAR during the year are as follows:

January 1-31, year 1	$0.84
Average year 1	0.82
December 31, Year 1	0.75

Required: Translate the Balance Sheet for the first year of operation. The company did not pay any dividends and the translated net income for year 1 was 2,050. Fill in the blanks below. Do not use dollar signs, but do include commas. There should be no cents in your answers.

Balance Sheet

December 31, Year 1

	ZARS	US$
Assets
Cash	8,500
Property and Equipment	9,000
Less: Accumulated Depreciation	(1,000)
Total Assets	16,500
Liabilities and Equity
Long-term Debt	4,000
Capital Stock	10,000
Retained Earnings	2,500
Cumulative Translation Adjustment
Total Liabilities and stockholders equity	16,500

Using your solution and the information from problem above. Please explain what the cumulative translation adjustment is and why the cumulative translation adjustment is a positive or negative on the balance sheet. You need to include in your response discussion on the change in exchange rate in year 1.