Lee Corporation

Lee Corporation began operations in January of 2004. In 2007 an misplay was discovered in the 2005 financial statements that had depreciation expense inform by $25,000 before a task rate of 40%. Lee Corporation also made a alteration in the method used to value memorial. The change resulted in a cumulative decrease in income of $35,000 with a tax rate of 40%. Lee Corporation also say dividends of $100,000 to be paid in early 2008. Income before taxes for 2007 was $240,000 with an in effect(p) tax rate of 40%, making net income for 2007 $144,000. The quest journal entries are needed to record these transactions and place other comprehensive income.

retained requital15,000
Deferred Taxes10,000
Accumulated disparagement25,000
To record the change in depreciation, net of the tax rate.


Retained Earnings21,000
Deferred Taxes14,000
Inventory35,000
To record the change in inventory valuation method, net of the tax rate for 2007.

Retained Earnings100,000
Dividends payable100,000
To record cash dividends declared in 2007, to be paid Jan 15, 2008.

Lee acquired a Canadian subsidiary for CA $100,000 which is the value of the sole asset of land that the subsidiary owned. The substitution rates obtained from www.x-rates.com for the years 2004 2007 are stated below.





Amount in Amount in
YearCanadian $U.S. $Factor
2004100,00083,065.50.830655
2005100,00086,136.40.861364
2006100,00085,888.50.858885
2007100,000101239.501.012395

Journal entries for the foreign give-and-take adjustments for years 2005 2007 are as follows.

Investment in appurtenant3070.90
Cumulative translation Adjustment3070.90
To record exchange adjustment for 2005 (86,136.40 83,065.50)

Cumulative translation Adjustment247.90
Investment in secondary 247.90
To record exchange adjustment for 2006 (85,888.50 - 86,136.40)

Investment in appurtenant15351.00
Cumulative translation Adjustment15351.00
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