2. Pokey Corporation acquired 80 percent ownership of Stereo Company on January 1, 20X6, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Stereo Company. Consolidated balance sheets at January 1, 20X8, and December 31, 20X8, are as follows: Item Jan 1, 20X8 Dec 31, 20X8 Cash $ 50,000 $ 80,000 Accounts Receivable 75,000 90,000 Inventory 85,000 100,000 Land 60,000 80,000 Buildings and Equipment 300,000 350,000 Less: Accumulated Depreciation (90,000 ) (120,000 ) Patents 12,000 10,000 Total Assets $ 492,000 $ 590,000 Accounts Payable $ 40,000 $ 58,000 Wages Payable 20,000 16,000 Notes Payable 150,000 175,000 Common Stock ($5 par value) 100,000 100,000 Retained Earnings 162,000 218,000 Noncontrolling Interest 20,000 23,000 Total Liabilities and Equities $ 492,000 $ 590,000 The consolidated income statement for 20X8 contained the following amounts: Sales $ 400,000 Cost of Goods Sold $ 172,000 Wage Expense 45,000 Depreciation Expense 30,000 Interest Expense 12,000 Amortization Expense 2,000 Other Expenses 52,000 (313,000 ) Consolidated Net Income $ 87,000 Income to Noncontrolling Interest (6,000 ) Income to Controlling Interest $ 81,000 Pokey and Stereo paid dividends of $25,000 and $15,000, respectively, in 20X8. Required: 1) Prepare a worksheet to develop a consolidated statement of cash flows for 20X8 using the indirect method of computing cash flows from operations. (6 points) 2) Prepare a consolidated statement of cash flows for 20X8. (6 points) Pokey Corporation and Stereo Company Consolidated Cash Flow Workpaper Year Ended December 31, 20X8 Item Balance 1/1/20X8 Debit Credit Balance 12/31/20X8 Cash 50,000 80,000 Accounts Receivable 75,000 90,000 Inventory 85,000 100,000 Land 60,000 80,000 Buildings and Equipment 300,000 350,000 Patents 12,000 10,000 582,000 710,000 Accumulated Depreciation 90,000 120,000 Accounts Payable 40,000 58,000 Wages Payable 20,000 16,000 Notes Payable 150,000 175,000 Common Stock 100,000 100,000 Retained Earnings 162,000 218,000 Noncontrolling Interest 20,000 23,000 582,000 162,000 162,000 710,000 2) Consolidated statement of cash flows for 20X8 Pokey Corporation and Subsidiary Consolidated Statement of Cash Flows Year Ended December 31, 20X8 Cash Flows from Operating Activities Consolidated Net Income $ 87,000 Noncash Expenses, Revenue, Losses, and Gains Included in Income: 1 2 3 4 5 6 Net Cash Provided by Operating Activities $ Cash Flows from Investing Activities 1 2 Net Cash Used in Investing Activities $ Cash Flows from Financing Activities 1 2 3 Net Cash Used in Financing Activities $ Net Increase in Cash $ Cash at Beginning of Year $ Cash at End of Year $

2. Pokey Corporation acquired 80 percent ownership of Stereo Company on January 1, 20X6, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 20 percent of the book value of Stereo Company. Consolidated balance sheets at January 1, 20X8, and December 31, 20X8, are as follows: Item Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Patents Total Assets Accounts Payable Wages Payable Notes Payable Common Stock ($5 par value) Retained Earnings Noncontrolling Interest Total Liabilities and Equities Jan 1, 20x8 $ 50,000 75,000 85,000 60,000 300,000 (90,000) 12,000 $ 492,000 $ 40,000 20,000 150,000 100,000 162.000 20,000 $ 492.000 Dec 31, 20X8 $ 80,000 90,000 100,000 80,000 350,000 (120,000) 10,000 $ 590,000 $ 58,000 16,000 175,000 100,000 218,000 23,000 $ 590,000 The consolidated income statement for 20x8 contained the following amounts: $ 400,000 Sales Cost of Goods Sold Wage Expense Depreciation Expense Interest Expense Amortization Expense Other Expenses Consolidated Net Income Income to Noncontrolling Interest Income to Controlling Interest $ 172.000 45.000 30.000 12,000 2.000 52,000 $ (313,000) 87,000 (6,000) 81.000 S Pokey and Stereo paid dividends of $25,000 and $15,000, respectively, in 20X8. Required: 1) Prepare a worksheet to develop a consolidated statement of cash flows for 20X8 using the indirect method of computing cash flows from operations. (6 points) 2) Prepare a consolidated statement of cash flows for 20X8.6 points) 3 1) Pokey Corporation and Stereo Company Consolidated Cash Flow Workpaper Year Ended December 31, 20X8 Item Balance 1/1/20X8 50,000 Debit Balance 12/31/20X8 Credit 80,000 75,000 90,000 85,000 100,000 Cash Accounts Receivable Inventory Land Buildings and Equipment Patents 60,000 80,000 300,000 350,000 10,000 12,000 582,000 710,000 90,000 120,000 40,000 58,000 Accumulated Depreciation Accounts Payable Wages Payable Notes Payable Common Stock Retained Earnings Noncontrolling Interest 20,000 150,000 16,000 175,000 100,000 100,000 162,000 218,000 20,000 23,000 582,000 162.000 162.000 710,000 2) Consolidated statement of cash flows for 20x8 Pokey Corporation and Subsidiary Consolidated Statement of Cash Flows Year Ended December 31, 20X8 $ 87,000 Cash Flows from Operating Activities Consolidated Net Income Noncash Expenses. Revenue. Losses, and Gains Included in Income: 1 || 4 5 6 $ Net Cash Provided by Operating Activities Cash Flows from Investing Activities 1 2 Net Cash Used in Investing Activities Cash Flows from Financing Activities 1 2 3 $ Net Cash Used in Financing Activities Net Increase in Cash Cash at Beginning of Year Cash at End of Year $ $