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1.) Prepare the Worksheet for the consolidated Statement of Cash Flows for 2020 using the indirect method

1.) Prepare the Worksheet for the consolidated Statement of Cash Flows for 2020 using the indirect method

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1.) Prepare the Worksheet for the consolidated Statement of Cash Flows for 2020 using the indirect method

2.) Prepare a consolidated statement of cash flows for Demtex Corporation and its subsidiary for the year ended December 31, 2020.

DEMTEX CORPORATION AND SCAND COMPANY Consolidated Worksheet December 31, 2020 DEMTEX SCAND Consolidation Entries Corporation Company DR CR Consolidated Income Statement Sales 400,000 200,000 90,000 22,000 488,000 Less: Cost of Goods Sold (280,000) (120,000) 8,000 81,000 4,000 20,000 (287,00) Less: Depreciation Expense Less Armortization Expense Less Other Expense Income from Scand Co. (25,000) (15,000) (40,000) (5,000) (65,000) 5,000 (35,000) 19,400 (30,000) 22,400 3,000 Consolidated Net Income Na in Net income of scand Ca. 79,400 35,000 139,400 13,600 116,000 2,000 91,000 (11,600) Controlling Interest in Net Income 79,400 35,000 153,000 118,000 79,400 Sutement of Retained Earnings Beginning Balance Net income Less: Dividends Decdared 273,000 79,400 (50,000) 150,000 35,000 (20.000) 150.000 153,000 118,000 20,000 138,000 273,000 79,400 (50.000 Ending Balance 302,400 165,000 303,000 302,400 Balance Sheet Cash Accounts Receivable Inventory 26,800 80,000 120,000 35,000 40,000 90,000 61,800 120,000 199,000 9.000 2.000 Patent vestment in Subsidiary 25,000 6,000 4,800 4,000 25,000 130,600 130,400 15,000 land Buldings & Equipment Less Accumulated Depreciation 70,000 340,000 (165,000) 20,000 200,000 (85,000) 10,000 20,000 80,000 520,000 (230,000) 20,000 Total Assets 602,400 300,000 59.800 186,400 775,800 Accounts Payable Bonds Payable Common Stock Retained Eaminas NClin NA of Scand Co. 80,000 120,000 100,000 302,400 15,000 70,000 50,000 165,000 95,000 190,000 100,000 302,400 88,400 50.000 303,000 4,000 3,200 138,000 85,600 10,000 Total Liabilities & Equity 602.400 300,000 360,200 233,600 775,800
Transcribed Image Text:DEMTEX CORPORATION AND SCAND COMPANY Consolidated Worksheet December 31, 2020 DEMTEX SCAND Consolidation Entries Corporation Company DR CR Consolidated Income Statement Sales 400,000 200,000 90,000 22,000 488,000 Less: Cost of Goods Sold (280,000) (120,000) 8,000 81,000 4,000 20,000 (287,00) Less: Depreciation Expense Less Armortization Expense Less Other Expense Income from Scand Co. (25,000) (15,000) (40,000) (5,000) (65,000) 5,000 (35,000) 19,400 (30,000) 22,400 3,000 Consolidated Net Income Na in Net income of scand Ca. 79,400 35,000 139,400 13,600 116,000 2,000 91,000 (11,600) Controlling Interest in Net Income 79,400 35,000 153,000 118,000 79,400 Sutement of Retained Earnings Beginning Balance Net income Less: Dividends Decdared 273,000 79,400 (50,000) 150,000 35,000 (20.000) 150.000 153,000 118,000 20,000 138,000 273,000 79,400 (50.000 Ending Balance 302,400 165,000 303,000 302,400 Balance Sheet Cash Accounts Receivable Inventory 26,800 80,000 120,000 35,000 40,000 90,000 61,800 120,000 199,000 9.000 2.000 Patent vestment in Subsidiary 25,000 6,000 4,800 4,000 25,000 130,600 130,400 15,000 land Buldings & Equipment Less Accumulated Depreciation 70,000 340,000 (165,000) 20,000 200,000 (85,000) 10,000 20,000 80,000 520,000 (230,000) 20,000 Total Assets 602,400 300,000 59.800 186,400 775,800 Accounts Payable Bonds Payable Common Stock Retained Eaminas NClin NA of Scand Co. 80,000 120,000 100,000 302,400 15,000 70,000 50,000 165,000 95,000 190,000 100,000 302,400 88,400 50.000 303,000 4,000 3,200 138,000 85,600 10,000 Total Liabilities & Equity 602.400 300,000 360,200 233,600 775,800
Demtex Corporation purchased 60% of Scand Company's outstanding shares on January 14, 2018, for $24,000 more than book value. At that date, the fair value of the non-controlling interest was $16,000 more than 40% of Scand's book value. The full amount of the differential is considered related to patents and is being amortised over an 8-year period. In 2018, Scand purchased a piece of land for $35,000 and later in the year sold it to Demtex for $45,000. Demtex is still holding the land as an investment. During 2020, Demtex bonds with a value of $100,000 were exchanged for equipment valued at $100,000. On January 1 2020, Demtex held inventory purchased previously from Scand for $48,000. During 2020, Demtex purchased an additional $90,000 of goods from Scand and held $54,000 of this inventory on December 31* 2020. Scand sells merchandise to the parent at cost plus a 20% markup. Scand also purchases inventory items from Demtex. On January 1* 2020, Scand held inventory it had previously purchased from Demtex for $14,000, and on December 31* 2020, it held goods it had purchased from Demtex for $7,000 during 2020. Scand's total purchases from Demtex in 2020 were $22,000. Demtex sells inventory to Scand at cost plus a 40% markup. The consolidated statement of financial position at December 31, 2020, contained the following amounts: Debit Credit 24 Cash 92,000 135,000 140,000 75,000 Accounts Receivable Inventory Land Buildings & Equipment 400,000 30,000 Patents Accumulated Depreciation Accounts Payable Bonds Payable NCI 210,000 114,200 90,000 84,800 100,000 Common Stock Retained Earnings 273,000 872,000 Totals 872,000 The following consolidation worksheet was prepared on December 31, 2020. All consolidation entries and adjustments have been entered properly in the worksheet. Demtex accounts for its investment in Scand using the equity method.
Transcribed Image Text:Demtex Corporation purchased 60% of Scand Company's outstanding shares on January 14, 2018, for $24,000 more than book value. At that date, the fair value of the non-controlling interest was $16,000 more than 40% of Scand's book value. The full amount of the differential is considered related to patents and is being amortised over an 8-year period. In 2018, Scand purchased a piece of land for $35,000 and later in the year sold it to Demtex for $45,000. Demtex is still holding the land as an investment. During 2020, Demtex bonds with a value of $100,000 were exchanged for equipment valued at $100,000. On January 1 2020, Demtex held inventory purchased previously from Scand for $48,000. During 2020, Demtex purchased an additional $90,000 of goods from Scand and held $54,000 of this inventory on December 31* 2020. Scand sells merchandise to the parent at cost plus a 20% markup. Scand also purchases inventory items from Demtex. On January 1* 2020, Scand held inventory it had previously purchased from Demtex for $14,000, and on December 31* 2020, it held goods it had purchased from Demtex for $7,000 during 2020. Scand's total purchases from Demtex in 2020 were $22,000. Demtex sells inventory to Scand at cost plus a 40% markup. The consolidated statement of financial position at December 31, 2020, contained the following amounts: Debit Credit 24 Cash 92,000 135,000 140,000 75,000 Accounts Receivable Inventory Land Buildings & Equipment 400,000 30,000 Patents Accumulated Depreciation Accounts Payable Bonds Payable NCI 210,000 114,200 90,000 84,800 100,000 Common Stock Retained Earnings 273,000 872,000 Totals 872,000 The following consolidation worksheet was prepared on December 31, 2020. All consolidation entries and adjustments have been entered properly in the worksheet. Demtex accounts for its investment in Scand using the equity method.
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