Translation of financial statements

Assume that your company owns a subsidiary operating in Canada. The subsidiary maintains its books in the Canadian Dollar (CAD) as its functional currency. Following are the subsidiarys financial statements (in CAD) for the most recent year:

The relevant exchange rates ($:CAD) are as follows:

BOY rate	$0.79
EOY rate	$0.85
Avg. rate	$0.82
PPE purchase date rate	$0.83
LTD borrowing date rate	$0.83
Dividend rate	$0.84
Historical rate (common stock and APIC)	$0.69

For both parts a. and b. below, use a negative sign with answers to indicate a reduction.

a. Translate the subsidiarys income statement, statement of retained earnings, balance sheet, and statement of cash flows into $US (assume that the BOY Retained Earnings is $676,636).

Round all answers in the "in US Dollars" column to the nearest dollar.

Income Statement:	In CADs	Translation Rate	In US Dollars
Sales	1,650,000	Answer	Answer
Cost of goods sold	(990,000)	Answer	Answer
Gross profit	660,000		Answer
Operating expenses	(429,000)	Answer	Answer
Net income	231,000		Answer
Statement of Retained Earnings:
BOY ret. earnings	866,250		Answer
Net income	231,000		Answer
Dividends	(23,100)	Answer	Answer
EOY ret. earnings	1,074,150		Answer
Balance Sheet:
Assets
Cash	$469,590	Answer	Answer
Accounts receivable	382,800	Answer	Answer
Inventory	491,700	Answer	Answer
Property, plant, and equipment (PPE), net	909,480	Answer	Answer
Total assets	$2,253,570		Answer
Liabilities and stockholders' equity
Current liabilities	$279,840	Answer	Answer
L-T liabilities	652,080	Answer	Answer
Common stock	110,000	Answer	Answer
APIC	137,500	Answer	Answer
Ret. earnings	1,074,150		Answer
AnswerCumulative translation adjustmentEffect of exchange rate on cash			Answer
Total liabilities and equity	$2,253,570		Answer
Statement of Cash Flows:
Net income	$231,000	Answer	Answer
Change in accounts receivable	(63,800)	Answer	Answer
Change in inventories	(81,950)	Answer	Answer
Change in current liabilities	46,640	Answer	Answer
Net cash from operating activities	131,890		Answer
Change in PPE, net	(84,480)	Answer	Answer
Net cash from investing activities	(84,480)		Answer
Change in long-term debt	108,680	Answer	Answer
Dividends	(23,100)	Answer	Answer
Net cash from financing activities	85,580		Answer
Net change in cash	132,990		Answer
AnswerCumulative translation adjustmentEffect of exchange rate on cash			Answer
Beginning cash	336,600	Answer	Answer
Ending cash	$469,590	Answer	Answer

b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $32,452.

Round all answers to the nearest dollar.

Direct computation of translation adjustment:
AnswerBOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year	Answer
Net income x (EOY - Average exchange rate)	Answer
AnswerBOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year	Answer
	Answer
AnswerBOY cumulative translation adjustmentBOY net assets x (EOY - BOY exchange rates)BOY net assets x BOY exchange rateNet income x (EOY - Average exchange rate)Net income x average exchange rateDividends x (EOY - Dividend exchange rate)Dividends x dividend exchange rateEOY net assets x EOY exchange rateEOY cumulative translation adjustmentTranslation adjustment for the year	Answer
EOY cumulative translation adjustment	Answer

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