Question

Jambaara Inc., an American company, established ownership in a subsidiary operating in Japan on 4 April 2008 by subscribing to shares in cash when the exchange rate was 13 ¥ to the $US. The balance sheet and income statement of the subsidiary for the year of 2009 follow:

Income Statement                                                                                                      

	¥
Sales Revenue	450,000
-Cost of Goods Sold	360,000
Gross Profit	90,000
- Other Expenses:
Distribution Expense	2,000
Cleaning Expenses	3,000
Supplies Expense	5,000
Interest Expense	5,000
Electricity Expense	13,000
Insurance Expense	7,000
Wages & Salaries Expense	4,000
Depreciation Expense: Furniture & Fixtures	3,000
Depreciation Expense: Buildings	5,000
Depreciation Expense: Tools & Equipment	2,000
Net Profit	41,000

Balance Sheet

	¥
Assets
Cash	57,000
Accounts Receivables	12,000
Notes Receivable	15,000
Inventory	40,000
Buildings	180,000
Tools & Equipment	40,000
Furniture & Fixtures	130,000
Accumulated Depreciation: Building	(15,000)
Accumulated Depreciation: Furniture & Fixtures	(8,000)
Accumulated Depreciation: Equipment	(10,000)
Total Net Assets	441,000
Liabilities & Stockholders’ Equity
Liabilities:
Notes Payable	30,000
Accounts Payable	15,000
Bonds Payable	55,000
Total Liabilities	100,000
Stockholders’ Equity:
Share Capital	300,000
+ Retained Earnings	41,000
Total Stockholders’ Equity	341,000
Total Liabilities & Stockholders’ Equity	441,000

Exchange Rates:	¥ to $US
April 4 (when shares sold)	13
Average for the year	11
December 31	10
When Buildings and Furniture purchased	9
When Land purchased	12
When Equipment Purchased	11
When Inventory Purchased	13

Required:

Translate using the Monetary Non-Monetary method

Answer 1

Income Statement		Y	Y to $ rate	$
Sales Revenue		450,000.00	11	40,909.09
-Cost of Goods Sold		360,000.00	11	32,727.27
Gross Profit		90,000.00	11	8,181.82
- Other Expenses:
Distribution Expense		2,000.00	11	181.82
Cleaning Expenses		3,000.00	11	272.73
Supplies Expense		5,000.00	11	454.55
Interest Expense		5,000.00	11	454.55
Electricity Expense		13,000.00	11	1,181.82
Insurance Expense		7,000.00	11	636.36
Wages & Salaries Expense		4,000.00	11	363.64
Depreciation Expense: Furniture & Fixtures		3,000.00	11	272.73
Depreciation Expense: Buildings		5,000.00	11	454.55
Depreciation Expense: Tools & Equipment		2,000.00	11	181.82
Net Profit		41,000.00	11	3,727.27

  

Balance Sheet
Assets
Cash	57,000.00	10	5,700.00
Accounts Receivables	12,000.00	10	1,200.00
Notes Receivable	15,000.00	10	1,500.00
Inventory	40,000.00	13	3,076.92
Buildings	180000	9	20,000.00
Tools & Equipment	40,000.00	11	3,636.36
Furniture & Fixtures	130,000.00	9	14,444.44
Accumulated Depreciation: Building	(15,000.00)	9	(1,666.67)
Accumulated Depreciation: Furniture & Fixtures	(8,000.00)	9	(888.89)
Accumulated Depreciation: Equipment	(10,000.00)	11	(909.09)
Total Net Assets	441,000.00		46,093.08
Liabilities & Stockholders’ Equity
Liabilities:
Notes Payable	30,000	10.00	3,000.00
Accounts Payable	15,000	10.00	1500
Bonds Payable	55,000	10.00	5500
Total Liabilities	100,000.00		10,000.00
Stockholders’ Equity:
Share Capital	300,000.00	13	23,076.92
+ Retained Earnings	41,000		3,727.27
Total Stockholders’ Equity	341,000.00		26,804.20
Total Liabilities & Stockholders’ Equity	441,000.00		36,804.20
Currency rate fluctuation			9,288.89