Translation of financial statements Assume that your company owns a subsidiary operating in Brazil. The subsidiary maintains its books in the Brazilian real (R$) as its functional currency. The subsidiary's financial statements (in RS) for the most recent year follow in part a. below: The relevant exchange rates for the $US value of the Brazilian real (R$) are as follows: BOY rate EOY rate $0.42 $0.57 Avg. rate $0.51 PPE purchase date rate $0.54 Dividend rate LTD borrowing date rate Historical rate (common stock and APIC) $0.40 $0.55 $0.56 For parts a. and b. below, use a negative sign with answers to indicate a reduction. a. Translate the subsidiary's income statement, statement of retained earnings, balance sheet, and statement of cash flows into $US using the current-rate method (assume that the BOY Retained Earnings is $853,625). Round all answers in the "In US Dollars" column to the nearest dollar. Income statement: Sales Cost of goods sold Gross profit Operating expenses Net income Statement of retained earnings: BOY ret. earnings Net income Dividends EOY ret, earnings Balance sheet: Assets In R$ Translation Rate In US Dollars $4,500,000 0 $ 0 (2,700,000) 0 0 1,800,000 D (1,170,000) 0 0 $630,000 $ D $2,362,500 $ 0 630,000 0 (63,000) 0 0 $2,929,500 $ 0 Cash $1,280,700 0 $ 0 Accounts receivable 1,044,000 0 0 Inventory 1,341,000 0 0 Total assets Property, plant, and equipment (PPE), net 2,480,400 $6,146,100 0 0 $ 0 Liabilities and stockholders' equity Current liabilities $763,200 0 $ 0 L-T liabilities Common stock APIC 1,778,400 0 0 300,000 0 0 375,000 0 0 Ret. earnings 2,929,500 0 0 Total liabilities and equity $6,146,100 $ 0 Statement of cash flows: Net income $630,000 0 $ Change in accounts receivable (174,000) 0 Change in inventories (223,500) 0 Change in current liabilities 127,200 0 Net cash from operating activities 359,700 Change in PPE, net (230,400) 0 Net cash from investing activities (230,400) Change in long-term debt 296,400 0 oooooooo 0 0 0 0 0 0 0 0 Dividends (63,000) 0 0 Net cash from financing activities 233,400 0 Net change in cash 362,700 0 0 Beginning cash 918,000 0 0 Ending cash $1,280,700 $ 0 b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $152,125. Round answers to the nearest dollar. Direct computation of translation adjustment: $ 0 Net income x (EOY - Average exchange rate) 0 = 0 0 0 EOY cumulative translation adjustment $ 0