Page 450 - Introduction to Business

424 PART 4 Accounting

EXHIBIT 12.8
Foreign Currency Translation Using the Current Rate Method

ADJUSTED TRIAL BALANCE
In British Pounds (BP)
December 31, 2004

Debit Credit
Cash 10,000
Accounts Receivable 35,000
Inventory 105,000
Equipment 60,000
Accum. Dep. 10,000
Accounts Payable 35,000
Bonds Payable 50,000
Revenues 120,000
General Expenses 108,000
Depreciation Expense 8,000
Dividends 4,000
Common Stock 62,000
Paid-in Capital in Excess of Par 44,000
Retained Earnings 9,000

Total 330,000 330,000

Exchange Rates:
1 BP $
Current Exchange Rate 0.520
Average Exchange Rate 0.490
At July 31, 2004 0.505
At June 30, 2001 0.470
Other: All common stock was issued on June 30, 2001 (i.e., 6/30/01).
Dividends were declared and paid on July 31, 2004.
Translated Retained Earnings at 12/31/04 was: $5,500

TRANSLATION FROM BRITISH POUNDS TO U.S. DOLLARS
CURRENT RATE METHOD

Exchange
Debits: BP’s Rates U.S. $’s
Cash 10,000 0.520 5,200
A/R 35,000 0.520 18,200
Inventory 105,000 0.520 54,600
Fixed Assets 60,000 0.520 31,200
General Expenses 108,000 0.490 52,920
Depreciation Exp. 8,000 0.490 3,920
Dividends (7/31/04) 4,000 0.505 2,020

Total 330,000 168,060
Credits:
Accum. Depreciation 10,000 0.520 5,200
A/P 35,000 0.520 18,200
Bonds Payable 50,000 0.520 26,000
Revenues 120,000 0.490 58,800
Common Stock (6/30/01) 62,000 0.470 29,140
Paid-in Cap. (6/30/01) 44,000 0.470 20,680
Retained Earnings 9,000 n.a. 5,500
Cum. Transl. Adjustment 4,540

Total 330,000 168,060

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