Prepare a consolidated statement of cash flows for Demtex Corporation and its subsidiary for the year ended December 31,2020.
Prepare a consolidated statement of cash flows for Demtex Corporation and its subsidiary for the year ended December 31,2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prepare a consolidated statement of

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.

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
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