Sendelbach Corporation is a U.S.-based organization with operations… Sendelbach Corporation is

  

Sendelbach Corporation is a U.S.-based organization with operations… Sendelbach Corporation is a U.S.-based organization with operations throughout the world. One of its subsidiaries is headquartered in Toronto. Although this wholly owned company operates primarily in Canada, it engages in some transactions through a branch in Mexico. Therefore, the subsidiary maintains a ledger denominated in Mexican pesos (Ps) and a general ledger in Canadian dollars (C$). As of December 31, 2020, the subsidiary is preparing financial statements in anticipation of consolidation with the U.S. parent corporation. Both ledgers for the subsidiary are as follows: Main Operation—Canada Debit   CreditAccounts payable       C$ 51,510Accumulated depreciation         47,000Buildings and equipment C$ 187,000      Cash   46,000      Common stock         70,000Cost of goods sold   223,000      Depreciation expense   8,900      Dividends, 4/1/20   39,000      Gain on sale of equipment, 6/1/20         7,000Inventory   99,000      Notes payable—due in 2023         89,000Receivables   88,000      Retained earnings, 1/1/20         155,590Salary expense   43,000      Sales         332,000Utility expense   11,000      Branch operation   7,200      Totals C$ 752,100   C$ 752,100  Branch Operation—Mexico Debit   CreditAccounts payable       Ps 74,000Accumulated depreciation         52,000Building and equipment Ps 60,000      Cash   69,000      Depreciation expense   4,000      Inventory (beginning—income statement)   43,000      Inventory (ending—income statement)         38,000Inventory (ending—balance sheet)   38,000      Purchases   77,000      Receivables   41,000      Salary expense   11,000      Sales         144,000Main office         35,000Totals Ps 343,000   Ps 343,000 Additional InformationThe Canadian subsidiary’s functional currency is the Canadian dollar, and Sendelbach’s reporting currency is the U.S. dollar. The Canadian and Mexican operations are not viewed as separate accounting entities.The building and equipment used in the Mexican operation were acquired in 2010 when the currency exchange rate was C$0.25 = Ps 1.Purchases of inventory were made evenly throughout the fiscal year.Beginning inventory was acquired evenly throughout 2019; ending inventory was acquired evenly throughout 2020.The Main Office account on the Mexican records should be considered an equity account. This balance was remeasured into C$7,200 on December 31, 2020.Currency exchange rates for 1 Ps applicable to the Mexican operation follow:     Weighted average, 2019 C$ 0.20January 1, 2020   0.22Weighted average rate for 2020   0.24December 31, 2020   0.25 The December 31, 2019, consolidated balance sheet reported a cumulative translation adjustment with a $56,950 credit (positive) balance.The subsidiary’s common stock was issued in 2007 when the exchange rate was $0.49 = C$1.The subsidiary’s December 31, 2019, retained earnings balance was C$155,590, an amount that has been translated into U.S.$66,663.The applicable currency exchange rates for 1 C$ for translation purposes are as follows:     January 1, 2020 US$ 0.70April 1, 2020   0.69June 1, 2020   0.68Weighted average rate for 2020   0.67December 31, 2020   0.65 Remeasure the Mexican operation’s account balances into Canadian dollars. (Note: Back into the beginning net monetary asset or liability position.)make financial statements (income statement, statement of retained earnings, and balance sheet) for the Canadian subsidiary in its functional currency, Canadian dollars.Translate the Canadian dollar functional currency financial statements into U.S. dollars so that Sendelbach can prepare consolidated financial statements. Business Accounting AC 559 Share (0)