On January 1, 20X1, Parent purchased shares of Subsidiary. The accountant started the financial statements below, but could not finish them. She also could not produce a statement of cash flows. You have decided to help her out because you are the well- trained Kangaroo and therefore an SCF expert. Note, you are NOT required to produce the direct method of disclosing operating cash flows. The Company uses the EQUITY method of accounting for this investment.

Shares of Subsidiary outstanding	80,000
Shares of Subsidiary acquired	8,000
Cost per share	$ 4.50
Subsidiary's income in 20X1	25,000

100% of the amortization of excess	9,000
Subsidiary's dividends in 20X1	4,000
Tax rate	30.00%
Estimated tax payment	7,000
Tax depreciation	56,000

Parent Company Income Statement for the year ended December 31, 20X1

Statement of Retained Earnings for the year ended December 31, 20X1

Ending retained earnings

Absolute Value of Change

Sales	$ 755,000
Income from Subsidiary
Cost of goods sold	337,000
Salary expense	291,000
Amortization expense	4,000
Depreciation expense	37,000
Interest expense	8,000

Beginning retained earnings	$ 27,200
Net income
Dividends	(5,600)

Pretax income Tax expense Net income

Parent Company Balance Sheet as of December 31

20X0 20X1

Cash	$ 49,600	$ 33,200
Accounts receivable	34,300	38,510	4,210
Inventory	19,800	17,190	2,610
Investment in Subsidiary	0
Equipment	338,900	422,600	83,700
Accumulated depreciation	(108,400)	(145,400)	37,000
Patent	40,000	36,000	4,000
Land	45,500	62,800	17,300
T otal	$ 419,700
Accounts payable	$ 89,600	$ 116,400	26,800
Taxes payable	13,000
Deferred taxes payable - Depreciation	16,900
Dividends payable	1,100	700	400
Notes payable	156,200	144,300	11,900
Common stock ($1 par value)	47,200	52,900	5,700
Additional paid-in capital	68,500	76,700	8,200
Retained earnings	27,200

T otal

$

419,700