Tugas26
Pylon Corporation acquired all the outstanding capital stock of sooth Company, Ltd. of
London on January 1, 20X5 for $800,000, when the exchange rate for British pounds was
$1.60 and Sooth’s stockholders’ equity consisted of £400,000 capital stock and £100,000
retained earned earnings. Sooth’s functional currency is the British pound. Balance sheet
accounts for Sooth at January 1, 20X5 in British pounds and U.S. dollars are summarized
as follows:
British
Exchange
U.S
Pounds
Rate
Dollars
Cash
50,000
Accounts Receivables-net
$
1.60
80,000
60,000
1.60
96,000
Inventories
40,000
1.60
64,000
Equipment
750,000
1.60
1,200,000
900,000
1,440,000
Accumulated Depreciation
250,000
1.60
400,000
Accounts payable
150,000
1.60
240,000
Capital stock
400,000
1.60
640,000
Retained earnings
100,000
1.60
160,000
900,000
1,440,000
Exchange rates for 20X5 are as follow:
Current exchange rate January 1, 20X5
$1.60
Average exchange rate for 20X5
1.63
Rate for cash dividens
1.62
Current exchange rate December 31, 20X5
1.65
Debits
Cash
£
20,000
Accounts Receivables-net
70,000
Inventories
50,000
Equipment
800,000
Cost of Sales
350,000
Depreciation expense
80,000
Operating expenses
100,000
Dividens
30,000
Expenses
£1,500,000
Credits
Accumulated Depreciation
Accounts payable
£
330,000
70,000
Capital stock
400,000
Retained earnings
100,000
Sales
600,000
£1,500,000
Required
1.
Prepare a translation worksheet to convert Sooth’s December 31, 20X5
adjusted trial balance into US dollars.
2.
Prepare journal entries on Phylon’s books to account for the investment
in Sooth for 20X5.