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a
Consolidated statement of cash flow: consolidated entities, as with individual companies, must present a statement of cash flow when they issue a complete set of financial statements. A consolidated statement of
preparation of worksheet to develop consolidated cash flows for 20X3 using direct method.
a
Answer to Problem 10.21P
Consolidated cash flows working paper shows balance of $1,894,000.
Explanation of Solution
P Corporation and S Corporation
Consolidated cash flow work paper
Year ended December 31, 20X4
| Balance $ 1/1/X4 | Debit | Credit | Balance $ 12/31/X4 | |
| Cash | 83,000 | 98,000 | 181,000 | |
| Accounts receivable | 210,000 | 35,000 | 175,00 | |
| Inventory | 320,000 | (c ) 50,000 | 370,000 | |
| Land | 190,000 | (d)30,000 | 160,000 | |
| Building and equipment | 850,000 | (e) 130,000 | 980,000 | |
| 40,000 | (g) 12,000 | 28,000 | ||
| Total Assets | 1,693,000 | 1,894,000 | ||
| 280,000 | (f) 45,000 | 325,000 | ||
| Accounts payable | 52,000 | (c) 22,000 | 74,000 | |
| Interest payable | 45,000 | (h)15,000 | 30,000 | |
| Bonds payable | 400,000 | (i )100,000 | 500,000 | |
| Bond premium | 18,000 | (h) 2,000 | 16,000 | |
| Common stock | 300,000 | 300,000 | ||
| Additional paid-in capital | 70,000 | 70,000 | ||
| 488,000 | (j) 25,000 | (k) 72,000 | 535,000 | |
| Non-controlling interest | 40,000 | (l) 3,000 | (k) 7,000 | 44,000 |
| Liability and equity | 1,693,000 | 323,000 | 323,000 | 1,894,000 |
| Cash flow from operations: | ||
| Cash received from customers | (b)635,000 | |
| Cash paid to suppliers | (c )403,000 | |
| Cash paid for interest on bonds payable | (h) 86,000 | |
| Cash flows from investing activities: | ||
| Sale of land | (d ) 10,000 | |
| Purchase of buildings and equipment | (e ) 130,000 | |
| Cash flows from financing activities: | ||
| Sale of bonds | (i)100,000 | |
| Dividends paid: | ||
| To P’s shareholders | (j)25,000 | |
| To Non-controlling shareholders | (l)3,000 | |
| Increase in cash | 98,000 | |
| 745,000 | 745,000 |
Explanation of work paper entries
- Increase in cash
- Payment received from customers
- Payments to supplier
- Sale of land
- Purchase of building and equipment
- Depreciation charges
- Goodwill impairment loss 20X4
- Payment of interest
- Sale of bonds
- P’s dividends $25,000
- Consolidated net income $79,000
- A’s dividends $15,000 x .20
b
Consolidated statement of cash flow: consolidated entities, as with individual companies, must present a statement of cash flow when they issue a complete set of financial statements. A consolidated statement of cash flows is similar to a statement of cash flows prepared for an individual corporate entity and is prepared in same manner. Consolidated statement of cash flow is prepared after consolidated financial statement. Consolidated cash flow statement is prepared form the information in the three consolidated statements, when an indirect approach is used consolidated net income must be adjusted for all items that affect consolidated net income and the cash of consolidated entity effectively.
preparation of consolidated statement of cash flows for 20X4.
b
Answer to Problem 10.21P
Net increase in cash as per consolidated cash flows statement $98,000.
Explanation of Solution
P Corporation and S Corporation
Consolidated cash flow statement
Year ended December 31, 20X4
| Amount $ | Amount $ | |
| Cash flow from operating activities: | ||
| Cash received from customers | 635,000 | |
| Less: Cash payments to suppliers | (403,000) | |
| Cash payments for interest | (86,000) | (489,000) |
| Net cash from operating activities | 146,000 | |
| Cash flows from investing activities | ||
| Sale of land | 10,000 | |
| Purchase of buildings and equipment’s | (130,000) | |
| Net cash used in investing activities | (120,000) | |
| Cash flows from financing activities: | ||
| Sale of bonds | 100,000 | |
| Dividends to parent company shareholders | (25,000) | |
| Dividends to non-controlling shareholders | (3,000) | |
| Net cash provided by financing activities | 72,000 | |
| Net increase in cash | 98,000 | |
| Cash balance at the beginning of year | 83,000 | |
| Cash balance at the end of year | 181,000 |
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Chapter 10 Solutions
EBK ADVANCED FINANCIAL ACCOUNTING
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