WEEK 6 HOMEWORK

QUESTION 8

Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2020, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows:

Main OperationCanada
	Debit			Credit
Accounts payable				C$	51,510
Accumulated depreciation					47,000
Buildings and equipment	C$	187,000
Cash		46,000
Common stock					70,000
Cost of goods sold		223,000
Depreciation expense		8,900
Dividends, 4/1/20		39,000
Gain on sale of equipment, 6/1/20					7,000
Inventory		99,000
Notes payabledue in 2023					89,000
Receivables		88,000
Retained earnings, 1/1/20					155,590
Salary expense		43,000
Sales					332,000
Utility expense		11,000
Branch operation		7,200
Totals	C$	752,100		C$	752,100

Branch OperationMexico
	Debit			Credit
Accounts payable				Ps	74,000
Accumulated depreciation					52,000
Building and equipment	Ps	60,000
Cash		69,000
Depreciation expense		4,000
Inventory (beginningincome statement)		43,000
Inventory (endingincome statement)					38,000
Inventory (endingbalance sheet)		38,000
Purchases		77,000
Receivables		41,000
Salary expense		11,000
Sales					144,000
Main office					35,000
Totals	Ps	343,000		Ps	343,000

Additional Information

• The Canadian subsidiarys functional currency is the Canadian dollar, and Sendelbachs reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities.

• The building and equipment used in the Mexican operation were acquired in 2010 when the currency exchange rate was C$0.25 = Ps 1.

• Purchases of inventory were made evenly throughout the fiscal year.

• Beginning inventory was acquired evenly throughout 2019; ending inventory was acquired evenly throughout 2020.

• The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,200 on December 31, 2020.

• Currency exchange rates for 1 Ps applicable to the Mexican operation follow:

Weighted average, 2019	C$	0.20
January 1, 2020		0.22
Weighted average rate for 2020		0.24
December 31, 2020		0.25

• The December 31, 2019, consolidated balance sheet reported a cumulative translation adjustment with a $56,950 credit (positive) balance.

• The subsidiarys common stock was issued in 2007 when the exchange rate was $0.49 = C$1.

• The subsidiarys December 31, 2019, retained earnings balance was C$155,590, an amount that has been translated into U.S.$66,663.

• The applicable currency exchange rates for 1 C$ for translation purposes are as follows:

January 1, 2020	US$	0.70
April 1, 2020		0.69
June 1, 2020		0.68
Weighted average rate for 2020		0.67
December 31, 2020		0.65

1. Remeasure the Mexican operations account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.)

2. Prepare financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars.

3. Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements.

Reg A Req B and C c Remeasure the Mexican operation's account balances into Canad asset or liability position.) (Input all amounts as positive values. Canadian Dollars Debit Credit Accounts payable Accumulated depreciation Building and equipment Cash Depreciation expense Inventory (beginningincome statement) Inventory (endingincome statement) Inventory (ending-balance sheet) Purchases Receivables Salary expense Sales Main office Total 0 0 Req A Reg Band b. Prepare financial statements (income statement, statement of retail subsidiary in its functional currency, Canadian dollars. C. Translate the Canadian dollar functional currency financial statement consolidated financial statements. (Round U.S. Dollar values to 2 decimal places. Amounts to be deductes SENDELBACH CORPORATION Financial Statements For the Year Ended December 31, 2020 Canadian U.S. Dollar Dollar Income Statement: Sales CS 368,840 Cast of goods sold Gross profit cs 368,840 s 0.00 Depreciation expense Salary expense Utility expense Gain on sale of equipment Remeasurement loss Net income cs 368,840 S 0.00 cs Statement of Retained Earnings: Relained earnings, 1/1/20 Net income Depreciation expense Retained earnings, 12/31/20 cs 0 S 0.00 Balance Sheet: Assets: csi Cash Receivables Inventory Building and equipment Accumulated depreciation cs 05 0.00 cs Total Llabilities and Equities: Accounts payable Notes payable Common stock Retained earnings Total CS S 0.00