The accountant for Consolidated Enterprises Inc. has just finished preparing a c

Question

The accountant for Consolidated Enterprises Inc. has just finished preparing a consolidated balance sheet, income statement, and statement of changes in retained earnings for 20X3. The accountant has asked for assistance in preparing a statement of cash flows for the consolidated entity. Consolidated Enterprises holds 80 percent of the stock of Separate Way Manufacturing. The following items are proposed for inclusion in the consolidated cash flow statement: Decrease in accounts receivable Increase in accounts payable Increase in inventory Increase in bonds payable Equipment purchased Common stock repurchased Depreciation reported for current Gain recorded on sale of equipment Book value of equipment sold Goodwill impairment loss Sales Cost of goods sold Dividends paid by parent Dividends paid by subsidiary Consolidated net income for the year Income $ 20,000 5,000 21,000 148,000 383,000 30,000 61,000 10,000 29,000 2,000 810,000 356,000 55,000 38,000 418,000 period assigned to the noncontrolling interest

Explanation / Answer

CONSOLIDATED ENTERPRISES INC.AND SUBSIDIARY Consolidated Statement of Cash Flows For the Year ended December 31,20x3 Cash flows from Operating Activities Consolidated Net Income for the year $418,000 Adjustments for non cash items Depreciation reported for current year $61,000 Gain recorded on sale of equipment -$10,000 Goodwill Impairment loss $2,000 Changes in operating assets and liabilities Decrease in accounts Receivables $20,000 Increase in accounts payables $5,000 Increase in Inventory -$21,000 Net Cash available from Operating activities $475,000 Cash flows from Investing activities Equipment Purchased -$383,000 Sale of equipment ($29000 + $10000) $39,000 Net Cash used for Investing activities -$344,000 Cash flows from Financing activities Increase in Bonds Payable $148,000 Common stock repurchased -$30,000 Dividend paid Dividend paid by parent -$55,000 Dividends paid by subsidiary ($38000*20%) -$7,600 Net Cash available from Financing activities $55,400 Net Cash Surplus $186,400

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