Kingscraft Inc., a company with headquarters in London, England, is a fully owned subsidiary of Dover Company. The accountant for Dover just received Kingscraft’s financial statements and must translate them from British pounds into U.S. dollars to prepare consolidated financial statements. Income statement and balance sheet data for the year just ended, along with relevant exchange rates, are as follows:
(in pounds) |
|
---|---|
Revenues |
£445,000 |
Cost of goods sold |
260,000 |
Gross margin |
£185,000 |
Other expenses |
80,000 |
Net income |
£105,000 |
Cash |
£ 46,000 |
Accounts receivable |
102,000 |
Inventory |
84,000 |
Plant and equipment |
172,000 |
Total assets |
£404,000 |
Current liabilities |
£ 62,000 |
Long-term debt |
54,000 |
Common stock |
90,000 |
Retained earnings |
198,000 |
Total liabilities and equity |
£404,000 |
Exchange rates follow. The numbers shown are the U.S. dollar equivalent of one pound.
On date of purchase |
$2.03 |
Average rate for the year |
1.87 |
On the balance sheet date |
1.84 |
On date of dividend payment |
1.89 |
In addition, dividends of 60,000 pounds were paid during the year. Kingscraft’s translated financial statements at year-end result in a translation adjustment with a debit balance of $73,000.
Instructions: Determine Kingscraft’s Retained Earnings balance, in U.S. dollars, at the beginning of the year.
Kingscraft Inc., a company with headquarters in London, England, is a fully owned subsidiary of Dover...
Kingscraft Inc., a company with headquarters in London, England, is a fully owned subsidiary of Dover Company. The accountant for Dover just received Kingscraft’s financial statements and must translate them from British pounds into U.S. dollars to prepare consolidated financial statements. Income statement and balance sheet data for the year just ended, along with relevant exchange rates, are as follows: (in pounds) Revenues £445,000 Cost of goods sold 260,000 Gross margin £185,000 Other expenses 80,000 Net income £105,000 Cash £...
Kingscraft Inc., a company with headquarters in London, England, is a fully owned subsidiary of Dover Company. The accountant for Dover just received Kingscraft’s financial statements and must translate them from British pounds into U.S. dollars to prepare consolidated financial statements. Income statement and balance sheet data for the year just ended, along with relevant exchange rates, are as follows: (in pounds) Revenues £445,000 Cost of goods sold 260,000 Gross margin £185,000 Other expenses 80,000 Net income £105,000 Cash £...
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