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Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 61,000 pounds. The
Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 61,000 pounds. The subsidiary immediately borrowed 158,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 219,000 pounds a building that had a 10 -year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2020, the subsidiary rented the building for three years to a group of local attorneys for 8,600 pounds per month. By year-end, rent payments totaling 86,000 pounds had been received, and 17,200 pounds was in accounts receivable. On October 1,2020,4,500 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 12,900 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow: Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary, and then translate this statement into U.S. dollars. (Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be indicated with minus sign.) \begin{tabular}{|l|l|l|l|} \hline \multicolumn{3}{|c|}{ SULLIVAN'S ISLAND COMPANY } \\ \hline & Pounds & Exchange Rate & U.S. Dollars \\ \hline Operating Activities: & & & \\ \hline Net income & & & \\ \hline Add: Depreciation expenses & & & \\ \hline Add: Increase in interest payable & & & \\ \hline Less: Increase in accounts receivable & & & \\ \hline & & & \\ \hline Cash flow from operating activities & & & \\ \hline Investing Activities: & & & \\ \hline Purchase of building & & & \\ \hline & & & \\ \hline Cash flow from investing activities & $ & & \\ \hline Financing Activities: & & & \\ \hline Borrowing on note & & & \\ \hline Dividends & & & \\ \hline Capital contribution & & & \\ \hline \hline & & & \\ \hline Cash flow from financing activities & & & \\ \hline Increase in cash & & & \\ \hline Effect of exchange rate change on cash & & & \\ \hline Beginning balance in cash & & & \\ \hline Ending balance in cash & & & \\ \hline \end{tabular}
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