The New York books showed as follows:
Trial Balance—New York Books
| Capital Stock | $1,000,000.00 | |
| Patents | $600,000.00 | |
| London Office Account | 656,100.00 | |
| Remittance Account | 291,712.50 | |
| Expenses | 10,000.00 | |
| Cash | 25,612.50 | |
| $1,291,712.50 | $1,291,712.50 |
The remittance account consisted of four 60-day drafts on London for £15,000 each, which were sold in New York at 4.85½, 4.86, 4.86½, and 4.86¾ respectively.
Make such journal entries as are necessary to incorporate with the New York accounts the results of the year’s business in London (conversion to be made at the average rate of exchange of the four remittances), and establish the new balance of the London office account so that it will agree with the London books when converted into sterling at 4.87¼, the rate of exchange ruling on the last day of the year. Show also trial balance of the New York books after closing.
XXII
Company A owns the entire capital stock of Companies B and C. The assets and liabilities of the respective companies are as follows:
Company A: cash $10,000; deferred charges $150; inventories $1,000; due from allied companies $25,000; notes receivable $15,000; petty cash $100; trade creditors $1,000; capital stock $100,000; surplus $5,250; notes payable $50,000; other investments $55,000; investments in allied companies $50,000.
Company B: trade debtors $10,000; cash $4,000; deferred charges $200; notes receivable $1,000; petty cash $500; inventories $8,000; land $10,000; buildings $25,000; equipment $20,000; surplus $1,000; dividends payable $500; due allied companies $30,000; notes payable $10,000; accrued liabilities $200; capital stock $25,000; trade creditors $12,000.
Company C: capital stock $30,000; notes payable $15,000; cash $2,000; trade creditors $4,000; notes receivable $1,000; petty cash $200; accrued expenses $100; trade debtors $3,500; allied companies $5,100; surplus $2,300; inventories $5,000; land $7,500; deferred charges $100; equipment $15,000; buildings $12,000.