The OUI Company is a French Company which was purchased by the YES Company which

Question

The OUI Company is a French Company which was purchased by the YES Company which is an American Compamy in 2010 The Financial Statements of OUI Company in Euros but following U.S. GAAP are as follows: (in Euros) Income Statement For Year 2017 OUI Company sales cost of goods sold gross profit depreciation building depreciation equipment operating expenses gain on sale of land income 800000 300,000 500,000 100,000 50,000 100,000 300,000 550,000 31-Dec-17 Balance Sheet OUICompany cash accounts receivable inventony equipment (net) building (net) and 500,000 500,000 1,000,000 1,000,000 8,000,000 1,000,000 total assets 12,000,000 accounts payable note payable 2,000,000 2,000,000 5,000,000 3,000,000 common stock retained earnings additional information: When YES Company purchased the stock of OUl Company, the Euro was worth $1.25 When OUICompany purchased the building, the Euro was worth $1.10 When OUICompany purchased the equipment the Euro was worth $1.04 During 2017 the average rate was 1 Euro worth $1.07 When OUICompany purchased the land the Euro was worth $1.11 On December 31, 2017 the Euro is worth $1.01 On December 31, 2016 The Retained Earnings of OUl in dollars was $4,000,000 OUl sold the land on August 20th when the Euro was worth $1.01 On October 4th OUI paid a 800,000 dividend when the dividend was worth $1.09 REQUIRED: PREPARE A BALANCE SHEET, INCOME STATEMENT AND STATEMENT OF RETAINED EARNINGS IN DOLLARS IF THE DOLLAR IS THE FUNCTIONAL CURRENCY

Explanation / Answer

INCOME STATEMENT FOR YEAR 2017 PARTICULARS Exchange Rate Amount(Euros) Amount($) Sales 1.07         8,00,000.00 8,56,000.00 COGS 1.07         3,00,000.00 3,21,000.00 Gross Profit         5,00,000.00 5,35,000.00 Dep. Building 1.1         1,00,000.00 1,10,000.00 Dep. Equipment 1.04             50,000.00      52,000.00 Operating exp. 1.07         1,00,000.00 1,07,000.00 Gain on sale of land 1.01         3,00,000.00 3,03,000.00 Income         5,50,000.00 5,69,000.00 Diff. in exchange 19,000.00 Statement of retained earnings retained earnings on 31 dec 16 4,000,000.00 Add: net income         5,69,000.00 TOTAL 45,69,000.00 Less: Dividends Paid(800000*1.09)         8,72,000.00 retained earnings on 31 dec 17 36,97,000.00 BALANCE SHEET as on 31 dec 17 Particulars Exchange Rate Amount(Euros) Amount($) cash 1.01          5,00,000.00         5,05,000.00 accounts receivable 1.01          5,00,000.00         5,05,000.00 inventory 1.25       10,00,000.00      12,50,000.00 Equipment (net) 1.04       10,00,000.00      10,40,000.00 Building(Net) 1.1       80,00,000.00      88,00,000.00 Land 1.11       10,00,000.00      11,10,000.00 Total Assets    1,20,00,000.00 1,32,10,000.00 Accounts payable 1.01       20,00,000.00      20,20,000.00 notes payable 1.01       20,00,000.00      20,20,000.00 common stock 1.0946       50,00,000.00    54,73,000.00 retained earnings See Statement       30,00,000.00    36,97,000.00 Total    1,20,00,000.00 1,32,10,000.00

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