Posted: July 6th, 2016
2. Lee Corporation changed its method of valuing inventory during 2007. The cumulative decrease in income from the change in inventory methods was $35,000 before taxes.
3. Lee Corporation declared cash dividends of $100,000 in late 2007 to be paid out in 2008.
Lee Corporation acquired a Canadian subsidiary whose sole asset is a piece of land. Lee Corporation acquired the subsidiary on 12/31/04 for the exact value of the land CA $100,000. Lee Corporation owns 100% of the subsidiary. Go to www.x-rates.com and use the historic lookup feature to determine the exact exchange rates on 12/31/04, 12/31/05, and 12/31/06.
1). Prepare journal entries for items 1 to 3 above.
2). Calculate and journalize the foreign exchange adjustments for 2005, 2006, and 2007 for the Canadian subsidiary.
3). Prepare a Retained Earnings Statement for the year ended December 31, 2007.
4). Prepare a Statement of Changes in Stockholders Equity for the year ended December 31, 2007.
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