Prepare a consolidated statement of cash flows for Demtex Corporation and its subsidiary for the year ended December 31,2020. 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 morethan 40% of Scand's book value. The full amount of the differential is considered related to patents and isbeing 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 wereexchanged 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 onDecember 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 hadpreviously purchased from Demtex for $14,000, and on December 31* 2020, it held goods it had purchasedfrom Demtex for $7,000 during 2020. Scand's total purchases from Demtex in 2020 were $22,000. Demtexsells inventory to Scand at cost plus a 40% markup.The consolidated statement of financial position at December 31, 2020, contained the following amounts:DebitCredit24Cash92,000135,000140,00075,000Accounts ReceivableInventoryLandBuildings & Equipment400,00030,000PatentsAccumulated DepreciationAccounts PayableBonds PayableNCI210,000114,20090,00084,800100,000Common StockRetained Earnings273,000872,000Totals872,000The following consolidation worksheet was prepared on December 31, 2020. All consolidation entries andadjustments have been entered properly in the worksheet. Demtex accounts for its investment in Scandusing the equity method. DEMTEX CORPORATION AND SCAND COMPANYConsolidated WorksheetDecember 31, 2020DEMTEXSCANDConsolidation EntriesCorporationCompanyDRCRConsolidatedIncome StatementSales400,000200,00090,00022,000488,000Less: Cost of Goods Sold(280,000)(120,000)8,00081,0004,00020,000(287,00)Less: Depreciation ExpenseLess Armortization ExpenseLess Other ExpenseIncome from Scand Co.(25,000)(15,000)(40,000)(5,000)(65,000)5,000(35,000)19,400(30,000)22,4003,000Consolidated Net IncomeNa in Net income of scand Ca.79,40035,000139,40013,600116,0002,00091,000(11,600)Controlling Interest in Net Income79,40035,000153,000118,00079,400Sutement of Retained EarningsBeginning BalanceNet incomeLess: Dividends Decdared273,00079,400(50,000)150,00035,000(20.000)150.000153,000118,00020,000138,000273,00079,400(50.000Ending Balance302,400165,000303,000302,400Balance SheetCashAccounts ReceivableInventory26,80080,000120,00035,00040,00090,00061,800120,000199,0009.0002.000Patentvestment in Subsidiary25,0006,0004,8004,00025,000130,600130,40015,000landBuldings & EquipmentLess Accumulated Depreciation70,000340,000(165,000)20,000200,000(85,000)10,00020,00080,000520,000(230,000)20,000Total Assets602,400300,00059.800186,400775,800Accounts PayableBonds PayableCommon StockRetained EaminasNClin NA of Scand Co.80,000120,000100,000302,40015,00070,00050,000165,00095,000190,000100,000302,40088,40050.000303,0004,0003,200138,00085,60010,000Total Liabilities & Equity602.400300,000360,200233,600775,800

Cash Flows is an important part of Accounting A cash flow statements as the term suggests is related…

Answered: Prepare a consolidated statement of…

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

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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