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 80,000 100% of the amortization of excess 9,000 Shares of Subsidiary acquired 8,000 Subsidiary's dividends in 20X1 4,000 Cost per share $ 4.50 Tax rate 30.00% Subsidiary's income in 20X1 25,000 Estimated tax payment 7.000 Tax depreciation 56,000 Parent Company Income Statement for the year ended December 31, 20X1 Statement of Retained Earnings Sales $ 755,000 for the year ended December 31, 20X1 Income from Subsidiary Beginning retained eamings $ 27,200 Cost of goods sold 337,000 Net income Salary expense 291,000 Dividends (5.600) Amortization expense 4,000 Ending retained earnings Depreciation expense 37,000 Interest expense 8.000 Pretax income Tax expense Net income Parent Company Balance Sheet as of December 31 Absolute Value of Change Cash 20X0 49,6003 20X1 33,200 $ 34,300 38,510 4,210 19,800 17,190 2,610 Accounts receivable Inventory Investment in Subsidiary Equipment 0 338.900 422,600 83,700 Accumulated depreciation (108,400) (145,400) 37,000 Patent 40,000 36.000 4,000 17,300 Land 45,500 62,800 Total $ 419,700 $ 89,600 $ 116,400 26.800 Accounts payable Taxes payable 13,000 16,900 Deferred taxes payable - Depreciation Dividends payable 1,100 700 400 156,200 144,300 11,900 Notes payable Common stock ($1 par value) Additional paid-in capital 47,200 52,900 5,700 68,500 76,700 8,200 Retained earnings 27,200 Total $ 419,700 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 80,000 100% of the amortization of excess 9,000 Shares of Subsidiary acquired 8,000 Subsidiary's dividends in 20X1 4,000 Cost per share $ 4.50 Tax rate 30.00% Subsidiary's income in 20X1 25,000 Estimated tax payment 7.000 Tax depreciation 56,000 Parent Company Income Statement for the year ended December 31, 20X1 Statement of Retained Earnings Sales $ 755,000 for the year ended December 31, 20X1 Income from Subsidiary Beginning retained eamings $ 27,200 Cost of goods sold 337,000 Net income Salary expense 291,000 Dividends (5.600) Amortization expense 4,000 Ending retained earnings Depreciation expense 37,000 Interest expense 8.000 Pretax income Tax expense Net income Parent Company Balance Sheet as of December 31 Absolute Value of Change Cash 20X0 49,6003 20X1 33,200 $ 34,300 38,510 4,210 19,800 17,190 2,610 Accounts receivable Inventory Investment in Subsidiary Equipment 0 338.900 422,600 83,700 Accumulated depreciation (108,400) (145,400) 37,000 Patent 40,000 36.000 4,000 17,300 Land 45,500 62,800 Total $ 419,700 $ 89,600 $ 116,400 26.800 Accounts payable Taxes payable 13,000 16,900 Deferred taxes payable - Depreciation Dividends payable 1,100 700 400 156,200 144,300 11,900 Notes payable Common stock ($1 par value) Additional paid-in capital 47,200 52,900 5,700 68,500 76,700 8,200 Retained earnings 27,200 Total $ 419,700
