Explore BrainMass
Share

Explore BrainMass

    Foreign currency translation problem

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    (See attached file for full problem description)

    ---
    Translation Problem -
    Translate the following financials using the current rate method. Relevant rates are as follows:
    1/1/04 1 bobb = $ .85 US
    10/1/04 1 bobb = $. 80
    12/31/04 1 bobb = $ .66
    Weight average 1 bobb = $ .785

    The rate in effect on the date of incorporation was .52.

    Dividends of 5,000 bobbs were paid on October 1, 2004

    Income Statement
    bobbs Ex Rate US Dollars
    Revenues 84,000
    Cost of Sales 62,000
    Gross margin 22,000
    Salaries 11,000
    Operating Expenses 3,500
    IBIT 7,500
    Taxes 2,000
    Net Income 5,500

    Statement of Retained Earnings
    bobbs Ex Rate US Dollars
    Retained Earnings 1/1/04 23,500 N/A $19,975
    Add: Income
    Less: Dividends
    Retained Earnings 12/31/04 .66

    Balance Sheet
    bobbs Ex Rate US Dollars
    ASSETS
    Cash 14,000
    Accounts Receivable 28,000
    Inventory 57,000
    Land 35,000
    Total Assets 134,000

    LIABILITIES & EQUITY
    Accounts Payable 10,000
    Common Stock 100,000
    Retained Earnings 24,000
    Cumulative Adjustment
    Total Liabilities & Equity 134,000
    ---

    © BrainMass Inc. brainmass.com April 3, 2020, 3:33 pm ad1c9bdddf
    https://brainmass.com/business/foreign-exchange-rates/foreign-currency-translation-problem-77439

    Attachments

    Solution Summary

    Classic problem!

    $2.19

    ADVERTISEMENT