Munich Bratwerst Company Balance sheet 12/31/2016 in EU\'s Cash 10,000 Accts rec

Question

Munich Bratwerst Company Balance sheet 12/31/2016 in EU's Cash 10,000 Accts rec 40,000 inventory 50,000 equip net 100,000 land 400,000 tot asset 600,000 accts pay 50,000 comm st 400,000 ret earn 150,000 Income statement For the year 2016 sales 1,500,000 cogs 800,000 gross pro 700,000 deprec exp 100,000 oper exp 510,000 net income 90,000 dividends of 40,000 eu paid 6/30 when 2eu=$1 december 31, 2016 4eu =$1 average 2016 3 eu =$1 June 1 1998 when stock acquired 1eu =$1 October 1, 1998 when equip purchased 1.5eu =$1 December 31, 2000 when land purchased 2eu=$1 retained earnings 1-1-16 $68,000 1)   PREPARE A DOLLAR DENOMINATED: INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF EQUITY IF THE DOLLAR IS THE FUNCTIONAL CURRENCY (TEMPORAL METHOD) 2)   PREPARE A DOLLAR DENOMINATED: INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF EQUITY IF THE EURO IS THE FUNCTIONAL CURRENCY (CURRENT RATE METHOD)   Munich Bratwerst Company Balance sheet 12/31/2016 in EU's Cash 10,000 Accts rec 40,000 inventory 50,000 equip net 100,000 land 400,000 tot asset 600,000 accts pay 50,000 comm st 400,000 ret earn 150,000 Income statement For the year 2016 sales 1,500,000 cogs 800,000 gross pro 700,000 deprec exp 100,000 oper exp 510,000 net income 90,000 dividends of 40,000 eu paid 6/30 when 2eu=$1 december 31, 2016 4eu =$1 average 2016 3 eu =$1 June 1 1998 when stock acquired 1eu =$1 October 1, 1998 when equip purchased 1.5eu =$1 December 31, 2000 when land purchased 2eu=$1 retained earnings 1-1-16 $68,000 1)   PREPARE A DOLLAR DENOMINATED: INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF EQUITY IF THE DOLLAR IS THE FUNCTIONAL CURRENCY (TEMPORAL METHOD) 2)   PREPARE A DOLLAR DENOMINATED: INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF EQUITY IF THE EURO IS THE FUNCTIONAL CURRENCY (CURRENT RATE METHOD)  

Explanation / Answer

1) Temporal method Balancesheet Eu Exchange rate $ Cash 10,000 4            2,500 Accts rec 40,000 4          10,000 inventory 50,000 1.5          33,333 equip net 100,000 1.5          66,667 land 400,000 2       200,000 tot asset 600,000           1.92       312,500 accts pay 50,000 4          12,500 comm st 400,000 1.00       400,000 ret earn 150,000     (100,000) Income statement For the year 2016 Eu Exchange rate $ sales 1,500,000 3       500,000 cogs 800,000 1.5       533,333 gross pro 700,000       (33,333) deprec exp 100,000 1.5          66,667 oper exp 510,000 3       170,000 net income 90,000     (270,000) 2) Current Rate method Balancesheet Eu Exchange rate $ Cash 10,000 4            2,500 Accts rec 40,000 4          10,000 inventory 50,000 4          12,500 equip net 100,000 4          25,000 land 400,000 4       100,000 tot asset 600,000 4       150,000 accts pay 50,000 4          12,500 comm st 400,000 1.00       400,000 ret earn 150,000     (262,500) Income statement For the year 2016 Eu Exchange rate $ sales 1,500,000 3       500,000 cogs 800,000 3       266,667 gross pro 700,000       233,333 deprec exp 100,000 3          33,333 oper exp 510,000 3       170,000 net income 90,000          30,000

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