Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 94,000 pounds. The subsidiary immediately borrowed 225,000 pounds on a five-year note with 9 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 319,000 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 8,850 pounds per month. By year-end, rent payments totaling 88,500 pounds had been received, and 17,700 pounds was in accounts receivable. On October 1, 2020, 4,100 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,575 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: January 1, 2020 October 1, 2020 December 31, 2020 Average for 2020 $2.60 = 1 Pound 2.65 = 2.68 = 2.64 1 = 1 1 Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and then translate these amounts into U.S. dollars. Complete this question by entering your answers in the tabs below. Income Statement Retained Earnings Balance Sheet Complete this question by entering your answers in the tabs below. Income Statement Retained Earnings Balance Sheet Prepare a Income Statement. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Income Statement For the Year Ended December 31, 2020 Pounds U.S. Dollars Rent revenue 106,200 $ 280,368 Interest expense (20,250) (53,460) Depreciation expense (31,900) (84,216) Repair expense (4,100) (10,865) Net income 49,950 $ 131,827 Income Statement Retained Earnings Balance Sheet Prepare a Statement of Retained earnings. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Statement of Retained Earnings For the Year Ended December 31, 2020 Pounds U.S. Dollars Retained earnings, 1/1 0 $ 0 Net income 49,950 131,827 Dividends declared, 12/31 (11,575) (31,021) Retained earnings, 12/31 38,375 $100,806 Prepare a Balance Sheet. (Amounts to be deducted should be indicated by a minus sign.) SULLIVAN'S ISLAND COMPANY Balance Sheet December 31, 2020 Pounds U.S. Dollars Assets: Cash Accounts receivable Building 319,000 854,920 Accumulated depreciation (31,900) (85,492) Total assets 287,100 $ 769,428 Liabilities and Equities: Interest payable 20,250 $ 54,270 Note payable 225,000 603,000 Contributed capital 94,000 244,400 Retained earnings Translation adjustment Total liabilities and equities 339,250 $ 901,670