Alford Company and its 80 percent–owned subsidiary, Knight, have the following income statements for 2011:

Additional Information for 2011

• Intra-entity inventory transfers during the year amounted to \($90,000\) and were downstream from Alford to Knight.
• Unrealized inventory gains at January 1 were \($6,000,\) but at December 31, they are \($9,000\).
• Annual excess amortization expense resulting from the acquisition is \($11,000\).
• Knight paid dividends totaling \($20,000\).
• The noncontrolling interest’s share of the subsidiary’s income is \($9,800\).
• During the year, consolidated inventory rose by \($11,000\) while accounts receivable and accounts payable declined by \($8,000\) and \($6,000,\) respectively.
Using either the direct or the indirect approach, determine the amount of cash generated from operations during the period by this business combination.

Transcribed Image Text:

Revenues Cost of goods sold. Depreciation and amortization Other expenses Gain on sale of equipment Equity in earnings of Knight Net income Alford $(500,000) 300,000 Knight $(230,000) 140,000 40,000 10,000 20,000 20,000 (30,000) -0- (36,200) -0- $(206,200) $ (60,000)