PLANET COMPANY AND SUBSIDIARY Consolidated Retained Earnings Statement Year Ended December 31, 20X6 Balance, January 1, 20X6 Income to Controlling Interest Dividends Declared, 20X6 Balance, December 31, 20X6 $290,000 148,000 $438,000 (65,000) $373,000 During 20X6, Sun reported net income of $60,000 and paid dividends of $20,000; Planet reported net income of $148,000 and paid dividends of $65,000. There were no intercompany transfers during the period. Required: Prepare a worksheet for a consolidated statement of cash flows for 20X6 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.) Assets Cash Accounts receivable Inventory Item Land Buildings and equipment Less: Accumulated depreciation Total Assets Liabilities & Equity Accounts payable Bonds payable Common stock Retained earnings Noncontrolling interest PLANET COMPANY AND SUBSIDIARY Consolidated Cash Flow Worksheet Year Ended December 31, 20X6 Total Liabilities & Equity Cash Flows from Operating Activities: Consolidated net income Depreciation expense Gain on sale of equipment Decrease in accounts receivable Increase in inventory Increase in accounts payable Cash Flows from Investing Activities: Consolidation Entries Balance 1/1/X6 Balance Debit Credit 12/31/X6 $ 0 0 0 0 0 0 $ 0 $ 0 $ 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 Total Liabilities & Equity Cash Flows from Operating Activities: Consolidated net income Depreciation expense Gain on sale of equipment Decrease in accounts receivable Increase in inventory Increase in accounts payable Cash Flows from Investing Activities: Sale of buildings and equipment Purchase of land Cash Flows from Financing Activities: Bond retirement Dividends Paid: To Planet Company shareholders To noncontrolling shareholders Increase in cash 0 $ 0 0 $ 0 69 0 $ 0 Sun Corporation was created on January 1, 20X2, and quickly became successful. On January 1, 20X6, its owner sold 80 percent of the stock to Planet Company at underlying book value. At the date of that sale, the fair value of the remaining shares was equal to 20 percent of the book value of Sun. Planet continued to operate the subsidiary as a separate legal entity and used the equity method in accounting for its investment in Sun. The following consolidated financial statements have been prepared: Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Total Assets Liabilities and Owners' Equity Accounts Payable Bonds Payable Noncontrolling Interest (290,000) $1,010,000 PLANET COMPANY AND SUBSIDIARY Consolidated Balance Sheets January 1, 20X6 December 31, 20X6 54,000 $ 75,000 121,000 111,000 230,000 360,000 95,000 100,000 800,000 650,000 (230,000) 90,000 300,000 30,000 Common Stock 300,000 $1,066,000 $ 105,000 250,000 38,000 300,000 Retained Earnings 290,000 373,000 Total Liabilities and Owners' Equity $1,010,000 $1,066,000 Sales PLANET COMPANY AND SUBSIDIARY Consolidated Income Statement Year Ended December 31, 20X6 Gain on Sale of Equipment Cost of Goods Sold Depreciation Expense Other Expenses Total Expenses Consolidated Net Income Income to Noncontrolling Interest Income to Controlling Interest $1,070,000 30,000 $1,100,000 $ 750,000 40,000 150,000 $ (940,000) $ 160,000 (12,000) $ 148,000