Kerry Manufacturing Company is a German subsidiary of a U.S. company. Kerry records its operationsand prepares financial statements in euros. However, its functional currency is the British pound.Kerry was organized and acquired by the U.S. company on June 1, 20X4. The cumulative translationadjustment as of December 31, 20X6, was $79,860. The value of the subsidiary\'s retained earnings expressedin British pounds and U.S. dollars as of December 31, 20X7, was 365,000 pounds and $618,000, respectively.On March 1, 20X7, Kerry declared a dividend of 120,000 euros. The trial balance of Kerry in euros as ofDecember 31, 20X7, is as follows:DebitCreditCash240,000Accounts Receivable (net)2,760,000Inventory (at cost)3,720,000Marketable Securities (at cost)2,040,000Prepaid Insurance210,000Depreciable Assets8,730,000Accumulated Depreciation1,417,000Cost of Goods Sold17,697,000Selling, General, and Administrative Expense4,762,000Sales Revenue26,430,000Investment Income180,000Accounts Payable2,120,000Unearned Sales Revenue960,000Loans and Mortgage Payable5,872,000Common Stock1,500,000Paid-in Capital in Excess of Par210,000Retained Earnings1,470,000 Total40,159,00040,159,000The marketable securities were acquired on November 1, 20X6, and the prepaid insurance was acquired onDecember 1, 20X7. The cost of goods sold and the ending inventory are calculated by the weighted-averagemethod.The following items are measured in pound at the December 31, 20x7.EurosPoundsAccumulated depreciationDepreciable Assets8,730,0002,671,380Cost of Goods Sold17,697,0005,262,294Selling, General, Admin. Expense4,762,0001,415,886Accumulated Depreciation1,417,000773,915Sales Revenue26,430,0007,866,030On November 1, 20X6, Kerry received a customer prepayment valued at 3,000,000 euros. On February 1,300000020X7, 2,040,000 euros of the prepayment was earned. The balance remains unearned as of December 31,204000020X7.960000Relevant exchange rates are as follows:Pounds/Euro$/PoundJune 1, 20X40.31$1.60March 1, 20X60.3$1.64November 1, 20X60.305$1.65December 31, 20X60.31$1.68February 1, 20X70.302$1.67March 1, 20X70.3$1.66December 1, 20X70.29$1.64December 31, 20X70.288$1.6420X7 average0.297$1.66Required:Prepare a remeasured and translated trial balance of the Kerry ManufacturingCompany as of December 31, 20X7.ANS:Kerry Manufacturing CompanyTrial Balance TranslationDecember 31, 20X7RelevantRelevantExchangeExchangeBalance inRateBalance inRateBalance inAccountEuros(Pds/Euros)Pounds($/Pds)DollarsCash240,000Accounts Receivable (net)2,760,000Inventory (at cost)3,720,000Marketable Securities (at cost)2,040,000Prepaid Insurance210,000Depreciable Assets8,730,000Cost of Goods Sold17,697,000Selling, General, Admin. Expense4,762,000Exchange LossTotal Debits40,159,00012,183,00120,117,316Accumulated Depreciation1,417,000Sales Revenue26,430,000Investment Income180,000Accounts Payable2,120,000Unearned Sales Revenue960,000Loans and Mortgage Payable5,872,000Common Stock1,500,000Paid-in Capital in Excess of Par.

1. Kerry Manufacturing Company is a German subsidiary of a U.S. company. Kerry records its
operationsand prepares financial statements in euros. However, its functional currency is the
British pound.Kerry was organized and acquired by the U.S. company on June 1, 20X4. The
cumulative translationadjustment as of December 31, 20X6, was $79,860. The value of the
subsidiary's retained earnings expressedin British pounds and U.S. dollars as of December 31,
20X7, was 365,000 pounds and $618,000, respectively.On March 1, 20X7, Kerry declared a
dividend of 120,000 euros. The trial balance of Kerry in euros as ofDecember 31, 20X7, is as
follows:DebitCreditCash240,000Accounts Receivable (net)2,760,000Inventory (at
cost)3,720,000Marketable Securities (at cost)2,040,000Prepaid Insurance210,000Depreciable
Assets8,730,000Accumulated Depreciation1,417,000Cost of Goods Sold17,697,000Selling,
General, and Administrative Expense4,762,000Sales Revenue26,430,000Investment
Income180,000Accounts Payable2,120,000Unearned Sales Revenue960,000Loans and Mortgage
Payable5,872,000Common Stock1,500,000Paid-in Capital in Excess of Par210,000Retained
Earnings1,470,000 Total40,159,00040,159,000The marketable securities were acquired on
November 1, 20X6, and the prepaid insurance was acquired onDecember 1, 20X7. The cost of
goods sold and the ending inventory are calculated by the weighted-averagemethod.The
following items are measured in pound at the December 31, 20x7.EurosPoundsAccumulated
depreciationDepreciable Assets8,730,0002,671,380Cost of Goods
Sold17,697,0005,262,294Selling, General, Admin. Expense4,762,0001,415,886Accumulated
Depreciation1,417,000773,915Sales Revenue26,430,0007,866,030On November 1, 20X6, Kerry
received a customer prepayment valued at 3,000,000 euros. On February 1,300000020X7,
2,040,000 euros of the prepayment was earned. The balance remains unearned as of December
31,204000020X7.960000Relevant exchange rates are as follows:Pounds/Euro$/PoundJune 1,
20X40.31$1.60March 1, 20X60.3$1.64November 1, 20X60.305$1.65December 31,
20X60.31$1.68February 1, 20X70.302$1.67March 1, 20X70.3$1.66December 1,
20X70.29$1.64December 31, 20X70.288$1.6420X7 average0.297$1.66Required:Prepare a
remeasured and translated trial balance of the Kerry ManufacturingCompany as of December 31,
20X7.ANS:Kerry Manufacturing CompanyTrial Balance TranslationDecember 31,
20X7RelevantRelevantExchangeExchangeBalance inRateBalance inRateBalance
inAccountEuros(Pds/Euros)Pounds($/Pds)DollarsCash240,000Accounts Receivable
(net)2,760,000Inventory (at cost)3,720,000Marketable Securities (at cost)2,040,000Prepaid
Insurance210,000Depreciable Assets8,730,000Cost of Goods Sold17,697,000Selling, General,
Admin. Expense4,762,000Exchange LossTotal
Debits40,159,00012,183,00120,117,316Accumulated Depreciation1,417,000Sales
Revenue26,430,000Investment Income180,000Accounts Payable2,120,000Unearned Sales

2. Revenue960,000Loans and Mortgage Payable5,872,000Common Stock1,500,000Paid-in Capital
in Excess of Par210,000Retained Earnings1,470,000Cumulative Translation Adjustment0-
19,392Total Credits40,159,00012,183,00120,117,316Kerry Manufacturing Company is a
German subsidiary of a U.S. company. Kerry records its operationsand prepares financial
statements in euros. However, its functional currency is the British pound.Kerry was organized
and acquired by the U.S. company on June 1, 20X4. The cumulative translationadjustment as of
December 31, 20X6, was $79,860. The value of the subsidiary's retained earnings expressedin
British pounds and U.S. dollars as of December 31, 20X7, was 365,000 pounds and $618,000,
respectively.On March 1, 20X7, Kerry declared a dividend of 120,000 euros. The trial balance
of Kerry in euros as ofDecember 31, 20X7, is as follows:DebitCreditCash240,000Accounts
Receivable (net)2,760,000Inventory (at cost)3,720,000Marketable Securities (at
cost)2,040,000Prepaid Insurance210,000Depreciable Assets8,730,000Accumulated
Depreciation1,417,000Cost of Goods Sold17,697,000Selling, General, and Administrative
Expense4,762,000Sales Revenue26,430,000Investment Income180,000Accounts
Payable2,120,000Unearned Sales Revenue960,000Loans and Mortgage
Payable5,872,000Common Stock1,500,000Paid-in Capital in Excess of Par210,000Retained
Earnings1,470,000 Total40,159,00040,159,000The marketable securities were acquired on
November 1, 20X6, and the prepaid insurance was acquired onDecember 1, 20X7. The cost of
goods sold and the ending inventory are calculated by the weighted-averagemethod.The
following items are measured in pound at the December 31, 20x7.EurosPoundsAccumulated
depreciationDepreciable Assets8,730,0002,671,380Cost of Goods
Sold17,697,0005,262,294Selling, General, Admin. Expense4,762,0001,415,886Accumulated
Depreciation1,417,000773,915Sales Revenue26,430,0007,866,030On November 1, 20X6, Kerry
received a customer prepayment valued at 3,000,000 euros. On February 1,300000020X7,
2,040,000 euros of the prepayment was earned. The balance remains unearned as of December
31,204000020X7.960000Relevant exchange rates are as follows:Pounds/Euro$/PoundJune 1,
20X40.31$1.60March 1, 20X60.3$1.64November 1, 20X60.305$1.65December 31,
20X60.31$1.68February 1, 20X70.302$1.67March 1, 20X70.3$1.66December 1,
20X70.29$1.64December 31, 20X70.288$1.6420X7 average0.297$1.66Required:Prepare a
remeasured and translated trial balance of the Kerry ManufacturingCompany as of December
31, 20X7.ANS:Kerry Manufacturing CompanyTrial Balance TranslationDecember 31,
20X7RelevantRelevantExchangeExchangeBalance inRateBalance inRateBalance
inAccountEuros(Pds/Euros)Pounds($/Pds)DollarsCash240,000Accounts Receivable
(net)2,760,000Inventory (at cost)3,720,000Marketable Securities (at cost)2,040,000Prepaid
Insurance210,000Depreciable Assets8,730,000Cost of Goods Sold17,697,000Selling, General,
Admin. Expense4,762,000Exchange LossTotal

3. Debits40,159,00012,183,00120,117,316Accumulated Depreciation1,417,000Sales
Revenue26,430,000Investment Income180,000Accounts Payable2,120,000Unearned Sales
Revenue960,000Loans and Mortgage Payable5,872,000Common Stock1,500,000Paid-in Capital
in Excess of Par210,000Retained Earnings1,470,000Cumulative Translation Adjustment0-
19,392Total Credits40,159,00012,183,00120,117,316
Solution
Trial balance of Kerry Manufacturing Company
Accounts
Balance in Euros
Relevant exchange rate (Pds/Euros)
Balance in Pounds
Relevant exchange rate ($/Pds)
Balance in Dollars
Cash
240000
0.288
69120
1.64
113356.8
Accounts receivable (Net)
2760000
0.288
794880
1.64
1303603
Inventory at cost
3720000
0.297
1104840
1.66
1834034
Marketable securities at cost
2040000
0.305

4. 622200
1.65
1026630
Prepaid insurance
210000
0.29
60900
1.64
99876
Depreciable assets
8730000
0.288
2514240
1.64
4123354
Costs of goods sold
17697000
0.297
5256009
1.66
8724975
Selling, general and administrative exp.
4762000
0.297
1414314
1.66
2347761
Exchange loss
6399
Total debits
40159000
11842902
19573590
Accumulated depreciation
1417000
0.288

5. 408096
1.64
669277.4
Sales revenue
26430000
0.297
7849710
1.66
13030519
Investment income
180000
0.297
53460
1.66
88743.6
Accounts payable
2120000
0.288
610560
1.64
1001318
Unearned sales revenue
960000
0.288
276480
1.64
453427.2
Loans and mortgage payable
5872000
0.288
1691136
1.64
2773463
Common stock
1500000
0.31

6. 465000
1.6
744000
Paid in capital in excess of par
210000
0.31
65100
1.6
104160
Retained earnings
1470000
0.288
423360
1.64
694310.4
Cumulative translation
Adjustments
14371.5
Total credits
40159000
11842902
19559219
Trial balance of Kerry Manufacturing Company
Accounts
Balance in Euros
Relevant exchange rate (Pds/Euros)
Balance in Pounds
Relevant exchange rate ($/Pds)
Balance in Dollars
Cash
240000
0.288
69120
1.64
113356.8
Accounts receivable (Net)

7. 2760000
0.288
794880
1.64
1303603
Inventory at cost
3720000
0.297
1104840
1.66
1834034
Marketable securities at cost
2040000
0.305
622200
1.65
1026630
Prepaid insurance
210000
0.29
60900
1.64
99876
Depreciable assets
8730000
0.288
2514240
1.64
4123354
Costs of goods sold
17697000
0.297
5256009
1.66
8724975
Selling, general and administrative exp.

8. 4762000
0.297
1414314
1.66
2347761
Exchange loss
6399
Total debits
40159000
11842902
19573590
Accumulated depreciation
1417000
0.288
408096
1.64
669277.4
Sales revenue
26430000
0.297
7849710
1.66
13030519
Investment income
180000
0.297
53460
1.66
88743.6
Accounts payable
2120000
0.288
610560
1.64
1001318
Unearned sales revenue

9. 960000
0.288
276480
1.64
453427.2
Loans and mortgage payable
5872000
0.288
1691136
1.64
2773463
Common stock
1500000
0.31
465000
1.6
744000
Paid in capital in excess of par
210000
0.31
65100
1.6
104160
Retained earnings
1470000
0.288
423360
1.64
694310.4
Cumulative translation
Adjustments
14371.5
Total credits
40159000
11842902
19559219