Reference no: EM133126990

Question - Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2020, by investing capital in the amount of 106,000 pounds. The subsidiary immediately borrowed 255,000 pounds on a five-year note with 9 percent interest payable annually beginning on January 1, 2021. The subsidiary then purchased for 361,000 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, 2020, the subsidiary rented the building for three years to a group of local attorneys for 9,150 pounds per month. By year-end, rent payments totaling 91,500 pounds had been received, and 18,300 pounds was in accounts receivable. On October 1, 2020, 4,700 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 11,425 pounds back to Sullivan's Island Company on December 31, 2020. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow:

January 1, 2020 $2.20 = 1 Pound

October 1, 2020 2.25 = 1

December 31, 2020 2.28 = 1

Average for 2020 2.24 = 1

Required - Prepare an income statement, statement of retained earnings, and balance sheet for this subsidiary in pounds and then translate these amounts into U.S. dollars.