Question

Sub Company is an 80%-owned subsidiary of Parent Company. Company was purchased on Jan stockholders' equity of $325,000. The interest in Sub uary 1, 2010 for $310,000 cash. At that date, Sub had 000. The excess price was attributed to equipment with a olidated trial ely ,0oodwill The following are comparative o consolidated trial balances 2010 Cash $ 17,000 60,000 100,000 1,500,000J (540,000) S 27,750 80,000 150,000 675,000 (640,000) 122,250 36,000 104,000) 200,000) (75,500) Accounts receivable PP&E 3r 25,000 31 Accum depr Investment in Charley Co. (30%) 36,000V (58,500 (50,000) (69,000) Accounts payable Bonds payable ing interest 50: 0 (500,000)4 (325,000入/ (170,500) Common stock (500,000) (325,000) (246,500) The following additional information is available: Paid-in capital Retained earnings Go°- Sub issued $150,000 of long-term bonds and later used the proceeds to purchase a Sub purchased equipment for $25,000. buildi 2011is is anhAnycme o On January 1, 2011, Parent purchased 30% of the outstanding stock of Charley Co. for $$115,000. This is an influential investment. Charley's equity was S350,000 on the date of purchase. Any excess cost is attributed to fixed assets with a 10-year life. Charley reported net income of $40,000 for 2011 and paid dividends of $12,500. Controlling share of consolidated net income for 2011 was $126,000; the noncontrolling interest in consolidated net income was $8,000. Parent paid dividends of S50,000; Sub paid dividends of $7,500 in 2011. . nsolidated statement of cash flows for 2011 using the indirect method for Pnerating cash fow. shedule is atached. You may ignore any schedule of Prepare the con operating cash flows signifi ficant non-cash transactions.

Answer 1

Parent Company Cash Flow Statement For the year 2011 Amount ($) Amount (S) Particulars Cash Flow from Operating Activities Retained Profit 76000 Profir of Charley Co 12000 Payment of Dividend 50000 Accumulated Depreciation 101000 Cash before change in working capital 215000 Increase in Invento 20000 Increase in Accounts Receivable 50000 Increase in Accounts Payable 45500 190500 Cash Flow from Investing Activities Purchase of PP&E 25000 Purchase of Buildings 150000 Investment in Charley Co 115000 Dividend Income 3750 286250 Cash Flow from Financina Activities Issue of Bonds 150000 Increase in Non Controlling Interest 6500 Payment of Dividend 50000 106500 Change in Cash and Cash Equivalents 10750 Add: Opening Cash and Cash Equivalents 17000 Closing Cash and Cash Equivalents 27750

Working for above cash flow statement is shown hereunder: Amount () Amount () Particulars Cash Flow from Operating Activities Retained Profit 246500-170500 Profir of Charley Co :-40000 0.3 Payment of Dividend 50000 -(640000-540000)+(115000-350000 0.3)/10 Accumulated Depreciation Cash before change in working capital -SUM(B35:B38 Increase in Invento --(80000-60000 Increase in Accounts Receivable --(150000-100000 Increase in Accounts Payable -SUM(B39:B42) -104000-58500 Cash Flow from Investing Activities Purchase of PP&E -25000 Purchase of Buildings -150000 Investment in Charley Co 115000 Dividend Income -12500 *0.3 -SUM(B45:B48) Cash Flow from Financina Activities Issue of Bonds 200000-50000 Increase in Non Controlling Interest 75500-69000 -SUM(B51:B53) Payment of Dividend 50000 Change in Cash and Cash Equivalents -SUM(C34:C53) Add: Opening Cash and Cash Equivalents 17000 Closing Cash and Cash Equivalents -SUM(C54:C55)