Translation of financial statements Assume that your company owns a subsidiary operating in Brazil. The subsidiary maintains its books in the Brazilian real (R$) as its functional currency. The subsidiary's financial statements (in R$) 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	$0.42
EOY rate	$0.57
Avg. rate	$0.51
PPE purchase date rate	$0.54
LTD borrowing date rate	$0.55
Dividend rate	$0.56
Historical rate (common stock and APIC)	$0.40

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 $858,625).

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

Income statement:	In R$	Translation Rate	In US Dollars
Sales	$4,500,000
Cost of goods sold	(2,700,000)
Gross profit	1,800,000
Operating expenses	(1,170,000)
Net income	$630,000
Statement of retained earnings:
BOY ret. earnings	$2,362,500
Net income	630,000
Dividends	(63,000)
EOY ret. earnings	$2,929,500
Balance sheet:
Assets
Cash	$1,280,700
Accounts receivable	1,044,000
Inventory	1,341,000
Property, plant, and equipment (PPE), net	2,480,400
Total assets	$6,146,100
Liabilities and stockholders' equity
Current liabilities	$763,200
L-T liabilities	1,778,400
Common stock	300,000
APIC	375,000
Ret. earnings	2,929,500
Cumulative translation adjustmentEffect of exchange rate on cash
Total liabilities and equity	$6,146,100
Statement of cash flows:
Net income	$630,000
Change in accounts receivable	(174,000)
Change in inventories	(223,500)
Change in current liabilities	127,200
Net cash from operating activities	359,700
Change in PPE, net	(230,400)
Net cash from investing activities	(230,400)
Change in long-term debt	296,400
Dividends	(63,000)
Net cash from financing activities	233,400
Net change in cash	362,700
Cumulative translation adjustmentEffect of exchange rate on cash
Beginning cash	918,000
Ending cash	$1,280,700

b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $147,125.

Round all answers to the nearest dollar.

Direct computation of translation adjustment:
BOY 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
Net income x (EOY - Average exchange rate)
BOY 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
BOY 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
EOY cumulative translation adjustment

Translation of financial statements recent year follow in part a. below: The relevant exchange rates for the $ US value of the Brazilian real (R\$) are as follows: For parts a. and b. below, use a negative sign with answers to indicate a reduction. $858,625). Round all answers in the "In US Dollars" column to the nearest dollar. $858,625 ). Round all answers in the "In US Dollars" column to the nearest dollar. \begin{tabular}{|c|c|c|} \hline Total assets & $6,146,100 & $ \\ \hline \multicolumn{3}{|l|}{ Liabilities and stockholders' equity } \\ \hline Current liabilities & $763,200 & $ \\ \hline L-T liabilities & 1,778,400 & \\ \hline Common stock & 300,000 & \\ \hline APIC & 375,000 & \\ \hline Ret. earnings & 2,929,500 & \\ \hline \multicolumn{3}{|c|}{^} \\ \hline Total liabilities and equity & $6,146,100 & $ \\ \hline \multicolumn{3}{|l|}{ Statement of cash flows: } \\ \hline Net income & $630,000 & $ \\ \hline Change in accounts receivable & (174,000) & \\ \hline Change in inventories & (223,500) & \\ \hline Change in current liabilities & 127,200 & \\ \hline Net cash from operating activities & 359,700 & \\ \hline Change in PPE, net & (230,400) & \\ \hline Net cash from investing activities & (230,400) & \\ \hline Change in long-term debt & 296,400 & \\ \hline Dividends & (63,000) & \\ \hline Net cash from financing activities & 233,400 & \\ \hline Net change in cash & 362,700 & \\ \hline \\ \hline Beginning cash & 918,000 & \\ \hline Ending cash & $1,280,700 & $ \\ \hline \end{tabular} b. Compute the ending Cumulative Translation Adjustment directly, assuming a BOY balance of $147,125. Round all answers to the nearest dollar