Reference no: EM132942252
Below is Malanoski's income statement, statement of retained earnings, and balance sheet for the year ending December 31, 2020. Malanoski's is a wholly owned Polish subsidiary of Castallano Inc., a U.S. based company.
(millions, PLN)
Income Statement for the year ending 12/31/2020
Revenue 90,000
Wage expense 37,000
Utilities expense 6,000
Rent expense 10,000
Pretax Income 37,000
Income taxes 5,500
Net income 31,500
Statement of Retained Earnings as of 12/31/2020
Beginning retained earnings 11,000
Net Income 31,500
Dividends 5,000
Ending retained earnings 37,500
Balance Sheet as of 12/31/2020
Assets
Cash 9,000
Accounts receivable 19,000
Equipment (net of accumulated depr) 80,000
Total Assets 108,000
Liabilities
Accounts payable 4,000
Notes payable 25,500
Shareholders' Equity
Capital stock 41,000
Retained earnings 37,500
Total Liabilities and Shareholders' Equity 108,000
Other information:
a. Castallano shows the ending retained earnings on last year's financial statements was translated to $3,300.
b. Capital stock is translated at a historical rate of ZLN 1.00 = US $0.280.
c. Dividends were paid on November 30, 2020 when the exchange rate was PLN 1.00 = US $0.318.
d. The average exchange rate for the year is PLN 1.00 = US $0.310.
e. The exchange rate as of 12/31/2020 is PLN 1.00 = $0.291
f. Taxes are paid periodically throughout the year.
Required:
Problem 1: Translate Malanoski's financial statements into US$ assuming that the Polish Zloty (PLN) is the functional currency.