Power Corporation owns 7'5 percent of Surge Company's stock: no intercompany purchases or sales were made in 20x4. For the year. Power and Surge reported sales of $350,000 and $230,000 and cost of goods sold of $180,000 and $109,250, respectively. Power's inventory increased by $21000, but Surge's decreased by 315.000. Power's accounts receivable increased by $18,000 and its accounts payable decreased by $16,000 during 20x4. Surge's accounts receivable decreased by $12,000 and its accounts payable increased by $6.000. Required: Assuming there were no other cash ows from operations, using the direct method of computing cash flows from operating activities, compute the following: a Cash received from customers b. Cash payments to suppliers | c. |Cash ows from operating activities Protecto Corporation purchased 90 percent of Strand Company's outstanding shares on January 1. 20x1, for $32,400 more than book value. At that date, the fair value of the noncontrolling interest was $71,200 more than 10 percent of Strand's book value. The full amount of the differential is considered related to patents and is being amortized over an eig htyear period. In 20x1, Strand purchased a piece of land for $44,000 and later in the year sold it to Protecto for $62,000. Protecto is still holding the land as an investment. During 20x3, Protecto bonds with a value of $125,000 were exchanged for equipment valued at $125,000. On January 1, 20x3, Protecto held inventory purchased previously from Strand for $52,000. During 20x3, Protecto purchased an additional $96,000 of goods from Strand and held $49,000 of this inventory on December 31, 20x3. Strand sells merchandise to the parent at cost plus a 25 percent markup. Strand also purchases inventory items from Protecto. On January 1, 20x3, Strand held inventory it had previously purchased from Protecto for $11,600, and on December 31, 20x3. it held goods it had purchased from Protecto for $5,800 during 20x3. Strand's total purchases from Protecto in 20x3 were $28,000. Protecto sells inventory to Strand at cost plus a 45 percent markup. The consolidated balance sheet at December 31, 20x2, contained the following amounts: The consolidated balance sheet at December 31, 20x2, contained the following amounts: Debit Credit Ca: h $ 99,666 Accounts Receivable 166,666 Inventory 155,666 Land ?6,666 Buildings and Equipment 466,666 Patents 29,766 Accumulated Depreciation $216,666 Accounts Payable 189,576 Bonds Payable 98,666 Noncontrolling Interest 24,136 Common Stock 126,666 Retained Earnings 2?2,666 Totals $919,?66 $919,?66 The consolidation worksheet below.r was prepared on December 31, 20x3. All consolidation entries and adjustments have been entered properly in the worksheet. Protecto accounts for its investment in Strand using the fully adjusted equity method. PROTECTO CORPORATION AND STRAND COMPANY Consolidation Worksheet December 31, 20X3 Consolidation Entries Protecto Strand Corporation Company DR CR Consolidated Income Statement Sales $ 450,000 $ 280,006 $ 96,000 $ 606,000 28, 060 Less: Cost of Goods Sold (325, 080) (000 '09T) $ 10, 400 (378, 600) 86, 260 3, 600 26, 200 Less: Depreciation Expense (29,000) (19, 080) (48,000) Less: Amortization Expense 4,950 (4,950 Less: Other Expense (37,000) (38,606) (75,600) Income from Strand Co. 36,585 41, 040 4,455 Consolidated Net Income $ 95,585 $ 43,006 $169, 990 $130, 855 $ 99,450 NCI in Net Income of Strand 4,360 495 (3,865) Controlling Interest in Net Income 95, 585 43,606 $174, 350 $131, 350 95, 585 Statement of Retained Earnings Beginning Balance $ 272,000 $ 180,000 $180, 000 $ 272,000 Net Income 95, 585 43, 000 174, 350 $131, 350 95, 585 Less: Dividends Declared (60,000) (24, 006) 24, 060 (60,000) Ending Balance $ 307,585 $ 199, 000 $354,350 $155, 350 $ 307, 585 Balance Sheet Assets Cash $ 28,200 $ 37,500 65,706 Accounts Receivable 81, 006 41, 006 122, 606 Inventory 120, 500 90, 800 $ 9,800 199, 700 1, 800 Patent $ 24,750 24, 750 Investment in Subsidiary 228,555 16, 200 235, 440 9,360 22, 275 3,600 Land 75,000 20, 800 18, 060 77, 800 Buildings and Equipment 323, 000 250, 000 75, 000 498, 006 Less: Accumulated Depreciation (170,000) (94, 006) 75,090 (189,000) Total Assets $ 686, 255 $ 346, 106 $128, 910 $362, 315 $ 798,950 Liabilities & Equity Accounts Payable $ 108, 670 14, 100 $ 122, 770 Bonds Payable 150,000 73, 006 223,000 Common Stock 120,080 60, 000 $ 60,090 120,000 Retained Earnings 307,585 199, 006 354,350 $155, 350 307,585 NCI in NA of Strand 1, 800 25, 960 25, 595 1, 040 2,475 Total Liabilities & Equity $ 686, 255 $ 346, 100 $417, 190 $183, 785 $ 798, 950Required: 3. Prepare a worksheet for a consolidated statement of cash flows for 20X3 using the indirect method. (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.) PROTECTO CORPORATION AND SUBSIDIARY Consolidated Cash Flow Worksheet Year Ended December 31, 20X3 Consolidation Entries Balance Balance Item 1/1/X3 Debit Credit 12/31/X3 Assets Cash Accounts receivable Inventory Land Buildings and equipment Less: Accumulated depreciation Patents Total Assets Liabilities & Equity Accounts payable Bonds payable Common stock Retained earnings Noncontrolling interest Total Liabilities & Equity Cash Flows from Operating Activities: Consolidated net income Amortization expense Depreciation expense Decrease in accounts receivable Increase in inventory Decrease in accounts payable Cash Flows from Investing Activities: Purchase of land Acquisition of buildings and equipment from bond issue Purchase of buildings and equipment Cash Flows from Financing Activities: Dividends Paid: To Protecto Corp. shareholders To noncontrolling shareholders Issuance of bonds for buildings and equipment Decrease in cash b. Prepare a consolidated statement of cash flows for 20X3. (Amounts to be deducted should be indicated with a minus sign.)b. Prepare a consolidated statement of cash flows for 20X3. (Amounts to be deducted should be indicated with a minus sign.) PROTECTO CORPORATION AND SUBSIDIARY Consolidated Statement of Cash Flows Year Ended December 31, 20X3 Cash Flows from Operating Activities: Adjustments for noncash items: Changes in operating assets and liabilities: Cash Flows from Investing Activities: Cash Flows from Financing Activities: Dividends Paid: Cash balance at beginning of year Cash balance at end of year