P4-19 Prepare consolidated statement of cash flows using either the direct or indirect method Comparative consolidated financial statements for Pam Corporation and its 80 percent–owned subsidiary at and for the years ended December 31 are summarized as follows:

PAM CORPORATION AND SUBSIDIARY COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS AT AND FOR THE YEAR ENDED DECEMBER 31 (IN THOUSANDS)

Year 2016 Year 2015 Year’s Change 2016–2015 Income and Retained Earnings Statements Sales $5,200 $4,800 $ 400 Income—equity investees 120 100 20 Cost of sales (2,900) (2,816) 84 Depreciation expense (400) (300) 100 Other operating expenses (940) (924) 16 Noncontrolling interest share (80) (60) 20 Controlling share of income 1,000 800 200 Retained earnings, January 1 2,000 1,400 600 Dividends (300) (200) 100 Retained earnings, December 31 $2,700 $2,000 $ 700 Year’s Change 2016–2015 Balance Sheet Cash $ 860 $ 720 $ 140 Accounts receivable—net 1,500 1,080 420 Inventories 1,400 1,400 0 Plant and equipment—net 3,600 3,000 600 Equity investments 860 800 60 Patents 380 400 (20)
Total assets $8,600 $7,400 $1,200 Accounts payable $ 984 $ 950 $ 34 Dividends payable 76 50 26 Long-term note payable 1,200 800 400 Capital stock 2,000 2,000 0 Other paid-in capital 1,200 1,200 0 Retained earnings 2,700 2,000 700 Noncontrolling interest—20% 440 400 40 Total equities $8,600 $7,400 $1,200 REQuIRED: Prepare a consolidated statement of cash flows for Pam Corporation and Subsidiary for the year ended December 31, 2016. Assume that all changes in plant assets are due to asset acquisitions with cash and depreciation. Income and dividends from 20 percent– to 50 percent–owned investees for 2016 were $120,000 and $60,000, respectively. Pam’s only subsidiary reported $400,000 net income for 2016 and declared $200,000 in dividends during the year. Patent amortization for 2016 is $20,000.