On January 1, 20X1, Parent purchased shares of Subsidiary. The accountant started the financial statements below, but could notfinish 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 operatingcash flows. The Company uses the EQUITY method of accounting for this investment.

Shares of Subsidiary outstanding80,000100% of the amortization of excess9,000Shares of Subsidiary acquired8,000Subsidiary's dividends in 20X14,000Cost per share4.50$Tax rate30.00%Subsidiary's income in 20X125,000Estimated tax payment7,000Tax depreciation56,000Parent CompanyIncome Statement for the year ended December 31, 20X1Statement of Retained EarningsSales755,000$for the year ended December 31, 20X1Income from SubsidiaryBeginning retained earnings27,200$Cost of goods sold337,000Net incomeSalary expense291,000Dividends(5,600)Amortization expense4,000Ending retained earningsDepreciation expense37,000Interest expense8,000Pretax incomeTax expenseNet incomeParent CompanyAbsoluteBalance Sheet as of December 3120X020X1Value of ChangeCash49,600$33,200$Accounts receivable34,30038,5104,210Inventory19,80017,1902,610Investment in Subsidiary0Equipment338,900422,60083,700Accumulated depreciation(108,400)(145,400)37,000Patent40,00036,0004,000Land45,50062,80017,300Total419,700$Accounts payable89,600$116,400$26,800Taxes payable13,000Deferred taxes payable - Depreciation16,900Dividends payable1,100700400Notes payable156,200144,30011,900Common stock ($1 par value)47,20052,9005,700Additional paid-in capital68,50076,7008,200Retained earnings27,200Total419,700