Reference no: EM132419454

Problem: Sullivan's Island Company began operating a subsidiary in a foreign country on January 1, 2017, by investing capital in the amount of 63,000 pounds. The subsidiary immediately borrowed 130,000 pounds on a five-year note with 10 percent interest payable annually beginning on January 1, 2018. The subsidiary then purchased for 193,000 pounds a building that had a 10-year expected life and no salvage value and is to be depreciated using the straight-line method. Also on January 1, 2017, the subsidiary rented the building for three years to a group of local attorneys for 8,000 pounds per month. By year-end, rent payments totaling 80,000 pounds had been received, and 16,000 pounds was in accounts receivable. On October 1, 4,200 pounds was paid for a repair made to the building. The subsidiary transferred a cash dividend of 14,000 pounds back to Sullivan's Island Company on December 31, 2017. The functional currency for the subsidiary is the pound. Currency exchange rates for 1 pound follow

January 1, 2017 $            3.40      =            1 Pound

October 1, 2017                            3.45      =            1

December 31, 2017                      3.48      =            1

Average for 2017                          3.44      =            1

________________________________________

Required: Prepare a statement of cash flows in pounds for Sullivan's Island Company's foreign subsidiary and then translate these amounts into U.S. dollars. (Round your exchange rate answers to 2 decimal places. Amounts to be deducted and cash outflows should be indicated with minus sign.) Please provide the authentic solutions along with all the calculation.