Alford Company and its 80 percent–owned subsidiary, Knight, have the following income statements for 2013:
| Alford | Knight |
Revenues | $(500,000) | $(230,000) |
Cost of goods sold | 300,000 | 140,000 |
Depreciation and amortization | 40,000 | 10,000 |
Other expenses | 20,000 | 20,000 |
Gain on sale of equipment | (30,000) | -0- |
Equity in earnings of Knight | (36,200) | -0- |
Net income | $(206,200) | $ (60,000) |
Additional Information for 2013
•Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford to Knight.
•Unrealized inventory profits at January 1 were $6,000, but at December 31, they are $9,000.
•Annual excess amortization expense resulting from the acquisition is $ 11,000.
•Knight paid dividends totaling $20,000.
•The noncontrolling interest’s share of the subsidiary’s income is $9,800.
•During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000 and $6,000, respectively.
Using either the direct or indirect method, compute net cash flows from operating activities during the period for the business combination.
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