Translation of financial statements Assume that your company owns a subsidiary operating in France. The subsidiary conducts most of its business activities in the European Economic Union and maintains its books in the Euro as its functional currency. The subsidiary's financial statements (in ) for the most recent year follow in part a. below:

The relevant exchange rates ($:1) are as follows:

BOY rate	$0.97
EOY rate	$1.06
Avg. rate	$1.03
PPE purchase date rate	$1.02
LTD borrowing date rate	$1.05
Dividend rate	$1.04
Historical rate (common stock and APIC)	$0.65

For both 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 $312,562. Round all answers to the nearest dollar (for part a. only).

Income Statement:	In Euros	Translation Rate	In US Dollars
Sales	750,000	Answer	Answer
Cost of goods sold	(450,000)	Answer	Answer
Gross profit	300,000		Answer
Operating expenses	(195,000)	Answer	Answer
Net income	105,000		Answer
Statement of Retained Earnings:
BOY ret. earnings	393,750		Answer
Net income	105,000		Answer
Dividends	(10,500)	Answer	Answer
EOY ret. earnings	488,250		Answer
Balance Sheet:
Assets
Cash	213,450	Answer	Answer
Accounts receivable	174,000	Answer	Answer
Inventory	223,500	Answer	Answer
Property, plant, and equipment (PPE), net	413,400	Answer	Answer
Total assets	1,024,350		Answer
Liabilities and stockholders' equity
Curr.liabilities	127,200	Answer	Answer
L-T liabilities	296,400	Answer	Answer
Common stock	50,000	Answer	Answer
APIC	62,500	Answer	Answer
Ret. earnings	488,250		Answer
AnswerCumulative translation adjustmentEffect of exchange rate on cash			Answer
Total liabilities and equity	1,024,350		Answer
Statement of Cash Flows:
Net income	105,000	Answer	Answer
Change in accounts receivable	(29,000)	Answer	Answer
Change in inventories	(37,250)	Answer	Answer
Change in current liabilities	21,200	Answer	Answer
Net cash from operating activities	59,950		Answer
Change in PPE, net	(38,400)	Answer	Answer
Net cash from investing activities	(38,400)		Answer
Change in long-term debt	49,400	Answer	Answer
Dividends	(10,500)	Answer	Answer
Net cash from financing activities	38,900		Answer
Net change in cash	60,450		Answer
Effect of exchange rate on cash			Answer
Beginning cash	153,000	Answer	Answer
Ending cash	213,450		Answer

b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $105,375.50.

Do not round your answers for part b.

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