Question

Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 63,000 pounds. The subsidiary immediately borrowed 160,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 223,000 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 7,400 pounds per month. By year-end, rent payments totaling 74,000 pounds had been received, and 14,800 pounds was in accounts receivable. On October 1, 3,800 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 14,000 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	$	2.80	=	1 Pound
October 1, 2017		2.85	=	1
December 31, 2017		2.88	=	1
Average for 2017		2.84	=	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.)

Answer 1