Pear Corporation acquired 75 percent ownership of Sugar Company on January 1, 20X1, at underlying book value. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Sugar Company. Consolidated balance sheets at January 1, 20X3, and December 31, 20X3, are as follows: Jan. 1, 20X3 Dec. 31, 20X3 Item Assets Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Patents Total Assets Liabilities and Owners' Equity Accounts Payable Wages Payable Notes Payable Common Stock ($10 par value) Retained Earnings Noncontrolling Interest Total Liabilities and Owners' Equity $ 80,500 86,000 117,000 47,000 523,000 (167,500) 8,000 $ 694,000 $ 112,500 101,000 125,000 57,000 558,000 (204,000 7,000 $ 756,500 62,000 $ 57,000 19,000 232,000 146,000 219,000 21,000 $ 694,000 $ 13,000 247,000 146,000 263,500 25,000 $ 756,500 The consolidated income statement for 20x3 contained the following amounts: $ 460, 750 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 $246,000 49,000 36,500 11,000 1,000 25,000 (368,500 $ 92,250 (10,750) $ 81,500 Pear and Sugar paid dividends of $37,000 and $27,000, respectively, in 20X3. Required: a. Prepare a worksheet to develop a consolidated statement of cash flows for 20X3 using the indirect method of computing cash flows from operations. (Values in the first two columns (the "parent" and "subsidiary" balances) that are to be deducted should be indicated with a minus sign, while all values in the "Consolidation Entries" columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.) Answer is not complete. Balance 12/31/X3 S 112,500 101,000 125,000 57,000 558,000 0 7,000 $ 960,500 PEAR CORPORATION AND SUBSIDIARY Consolidated Cash Flow Worksheet Year Ended December 31, 20X3 Consolidation Entries Balance Item 1/1/X3 Debit Credit Assets Cash $ 80,500 $ 32,000 Accounts receivable 86,000 15,000 Inventory 117.000 8,000 Land 47,000 10,000 Buildings and equipment 523,000 35,000 Less: Accumulated depreciation 36,500 Patents 8,000 1,000 Total Assets $ 861,500 Liabilities & Equity Accounts payable $ 57,000 $ 5,000 Wages payable 19,000 6,000 Notes payable 232,000 15.000 Common stock 146,000 Retained earnings 219,000 Noncontrolling interest 21,000 Total Liabilities & Equity $ 694,000 $ 106,000 $ 57,500 Cash Flows from Operating Activities: Consolidated net income $ 92,250 Depreciation expense 36,500 Amortization of patent 1,000 Changes in operating assets and liabilities: Increase in accounts receivable 15.000 Increase in inventory 8,000 Increase in accounts payable 5,000 Decrease in wages payable 6,000 Cash Flows from Investing Activities: Purchase of land 10,000 Purchase of buildings and equipment 35.000 Cash Flows from Financing Activities: Increase in notes payable 15,000 $ 62,000 13,000 247,000 146,000 219,000 21,000 $ 708,000 15,000 Cash Flows from Financing Activities: Increase in notes payable Dividends Paid: To Pear Corporation shareholders To Sugar Company shareholders Increase in cash 37,000 $ 149,750 $ 111,000 b. Prepare a consolidated statement of cash flows for 20X3. (Amounts to be deducted should be indicated with a minus sign.) X Answer is not complete. PEAR CORPORATION AND SUBSIDIARY Consolidated Statement of Cash Flows Year Ended December 31, 20X3 Cash Flows from Operating Activities Consolidated net income $ 92,250 Adjustments for noncash items: Depreciation expense 36,500 Amortization expense 1,000 Changes in operating assets and liabilities: Increase in accounts receivable (15,000) Increase in inventory (8,000) Increase in accounts payable 5,000 Decrease in wages payable (6,000) OOOO . 105,750 Net cash provided by operating activities Cash Flows from Investing Activities: Purchase of buildings and equipment Purchase of land (35,000) (10,000) (45,000) Cash Flows from Financing Activities: Increase in notes payable Dividends paid to parent company shareholders Dividends paid to noncontrolling shareholders OOO 15,000 (37,000) (6.750) . (28,750) $ 32,000 Net increase in cash Cash at beginning of year Cash at end of year $ 32,000