Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 60,000 pounds. The subsidiary immediately borrowed 140,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 200,000 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 8,000 pounds per month. By year-end, rent payments totaling 80,000 pounds had been received, and 16,000 pounds was in accounts receivable. On October 1, 2020, 4,000 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 12,000 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 $2.00 = 2.05 = 2.08 2.04 = 1 Pound 1 1 1 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.) U.S. Dollars SULLIVAN'S ISLAND COMPANY Statement of Cash Flows Pounds Exchange Rate Operating Activities: Net income 58,000 Add: Depreciation expenses 20,000 $ 2.04 Less: Increase in accounts receivable (16,000) $ 2.04 Add: Increase in interest payable 14,000 $ 2.04 $ 116,000 40,800 (32,640) 28,560 76,000 152,720 Cash flow from operating activities Investing Activities: Purchase of building (200,000) 2.00 (400,000) $ (200,000) $ (400,000) Cash flow from investing activities Financing Activities: Capital contribution Borrowing on note Dividends 2.00 60,000 140,000 (12,000) $ $ $ 2.00 120,000 280,000 (24,960) 2.08 188,000 64,000 375,040 130,080 Cash flow from financing activities Increase in cash Effect of exchange rate change on cash Beginning balance in cash Ending balance in cash 64,000 $ 130,080