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Par of Chicago acquired all the outstanding capital stock of Sar of London on January 1 2016 for $1120000 The exchange rate for British pounds was $1 40 and Sars stockholders equity was

Par of Chicago acquired all the outstanding capital stock of Sar of London on January 1, 2016, for $1,120,000. The exchange rate for British pounds was $1.40 and Sar s stockholders equity was £800,000, consisting of £500,000 capital stock and £300,000 retained earnings. The functional currency of Sar is the U.S. dollar. Exchange rates for British pounds for 2016 are as follows: Current rate January 1, 2016 ................ $1.40 Current rate December 31, 2016 ............ 1.50 Average exchange rate for 2016 ............. 1.55 Exchange rate for dividends ................ 1.54 Sar s cost of goods sold consists of £200,000 inventory on hand at January 1, 2016, and purchases of £600,000 less £150,000 inventory on hand at December 31, 2016, that was acquired at an exchange rate of $1.68. All of Sar s plant assets were on hand when Par acquired Sar, and Sar s other expenses were paid in cash or relate to accounts payable. Sar s adjusted trial balance at December 31, 2016, in British pounds is as follows: Debits Cash .................................... £50,000 Accounts receivable ................. 200,000 Short-term note receivable .......... 50,000 Inventories ............................ 150,000 Land ................................... 300,000 Buildings-net ..................... 400,000 Equipment-net .................... 500,000 Cost of sales ....................... 650,000 Depreciation expense

Apr 21 2020 View more View Less

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