Question

do the whole statement of cash flow

Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 72,000 pounds. The subsidiary immediately borrowed 148,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 220,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2017, the subsidiary rented the building for three years to a group of local attorneys for 8,400 pounds per month. By year-end, rent payments totaling 84,000 pounds had been received, and 16,800 pounds was in accounts receivable. On October 1, 4,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,000 pounds back to Sullivan's Island Company on December 31, 2017. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow January 1, 2017 October 1, 2017 December 31, 2017 Average for 2017 $ 2.30 - 2.35 - 2.38 - 2.34 - 1 Pound 1 1 1 Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary and then translate these amounts into U.S. dollars. (Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be Indicated with minus sign.) U.S. Dollars SULLIVAN'S ISLAND COMPANY Statement of Cash Flows Pounds Exchange Rate Operating Activities: Net income 55,400 Add: Depreciation expenses 22,000 Less: Increase in accounts receivable (16,800)| Add: Increase in interest payable 14,800 75,400 Cash flow from operating activities Investing Activities: Purchase of building Cash flow from investing activities Financing Activities:

Answer 1

SULLIVAN COMPANY SUBSIDIARY
Statement of Cash Flows
	Pounds	Exchange rate	U.S. Dollars
Operating Activities:
Net income (calculated below)	59,200.		138480
Add: Depreciation	22,000.	2.34	51480
less: increase in accounts receivable (	-16,800.	2.34	-39312
Add increase in interest payable ($148,000 x 10%)payable in Jan 2018	14,800.	2.34	34632
Cash flow from operations	79,200.		185280
Investing Activities:
Purchase of building (Jan 1,2017 Rate)	-220,000.	2.3	-506000
Financing Activities:
Sale of common stock	72,000.	2.3	165600
Borrowing on note	148,000.	2.3	340400
Dividends paid	-11,000.	2.38	-26180
Cash from financing activities	209,000.		479820
Increase in cash	68,200.		159100
Effect of exchange rate change on cash			3216
Cash, 1/1	0.		0
Cash, 12/31	68,200.	2.38	162316
Sullivan Company
Subsidiary Income Statement
	Pounds	Exchange rates	U.S. Dollars
Rent revenue (8,400 x 12 months) ; Average Rate	100,800.	2.34	235872
Less:
Interest Expense 148,000 x 10%; Average Rate	14,800.	2.34	-34632
Depreciation Expense  220,000/10 years;Average Rate	22,000.	2.34	-51480
Repair Expense(given),rate on Oct 1	4,800.	2.35	-11280
Net Income	59,200.		138480