PROTECTO CORPORATION AND STRAND Consolidation Worksheet December 31, 20x3 Consolidation Entries Protecto Corporation Strand Company DR CR Consolidated Income Statement Sales $530,000 $ 420,000 $ 813,000 $110,000 27.000 Less: Cost of Goods Sold (395,000) (380,000) (557,400) $ 10,400 96,000 6,200 25,000 (43,000) (33,000) 5,550 (52,000) (35,600) 19,710 $ 76,110 $ 35,600 Less: Depreciation Expense Less: Amortization Expense Less: Other Expense Income from Strand Co. Consolidated Net Income NCI in Net Income of Strand Controlling Interest in Net Income Statement of Retained Earnings Beginning Balance Net Income Lesst Dividends Declared Ending Balance $ (76,699) (5,55e) (87,600) e 86,450 (10,340) 76.119 23,840 $165,590 12,560 $178,150 3,330 $140,93e 2.220 $ 143,150 $76,119 $ 35,00 $ $ 205,000 178,15e $ 286,000 76,110 (63.eee) $ 299,110 $ 205,000 35.ee 38.000 $ 202,000 $143,150 38. eee $181,150 $ 286, eee 76,11e (63,eee) $ 299, 110 $383,150 Balance Sheet Assets Cash Accounts Receivable Inventory $ $ 31,eee 95,000 134,000 $ 44,500 43,800 93,600 75,500 138,800 211,600 $ 14,000 2.ee Patent Investment in Subsidiary 163,850 27,750 @ $ 27,750 9.000 6,240 6,200 173,6-40 16,650 Land Buildings and Equipment Less: Accumulated Depreciation 79,000 511,eee (171,000) 23,600 300,000 (106,eee) 15,000 73,000 87,600 738,eee (204, eee) 73,000 Total Assets $ 847,850 $ 399, see $122.190 $294,290 $1.075, 250 $ 121,240 Liabilities & Equity Accounts Payable Bonds Payable Coro Stock Retained Earnings NCT in Hof Strand $ 184,740 184,000 260,000 299, 110 $ 16,500 97.000 84,000 202,000 $ 84,000 383,150 260, e 299, 110 113.900 $181,150 112,960 11,100 5305, 210 Total Liabilities & Equity 5847,850 4,160 5477310 $ 399,500 51,075,25e Saved ment Consolidating Entries Protecto Corporation purchased 60 percent of Strand Company's outstanding shares on January 1, 20X1, for $27,300 more than book value. At that date, the fair value of the noncontrolling interest was $17,100 more than 40 percent of Strand's book value. The full amount of the differential is considered related to patents and is being amortized over an eight-year period. In 20X1, Strand purchased a piece of land for $72,000 and later in the year sold it to Protecto for $87,000. Protecto is still holding the land as an investment During 20X3, Protecto bonds with a value of $195,000 were exchanged for equipment valued at $195,000 On January 1, 20X3, Protecto held inventory purchased previously from Strand for $52,000. During 20x3, Protecto purchased an additional $110,000 of goods from Strand and held $70,000 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 $21700, and on December 31, 20X3, it held goods it had purchased from Protecto for $7,000 during 20X3. Strand's total purchases from Protecto in 20x3 were $27,000. Protecto sells inventory to Strand at cost plus a 40 percent markup. The consolidated balance sheet at December 31, 20X2, contained the following amounts: Debit Credit $ 103,000 Inventory 152,000 84,000 Buildings and Equipment Patents Accumulated Depreciation Accounts Payable Bonds Payable Noncontrolling Interest Common Stock Retained Earnings Totals Cash Accounts Receivable 205,000 Land 540,000 33,300 $ 201,000 165,540 86,690 118,760 260,000 286,000 51.117,300 51.117300 The consolidation worksheet below 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 PROTECTO CORPORATION AND SUBSIDIARY Consolidated Cash Flow Worksheet Year Ended December 31, 20X3 Consolidation Entries Balance Debit Credit 1/1/X3 Item Balance 12/31/X3 $ 27.500 66.200 Assets Cash Accounts receivable Inventory Land Buildings and equipment Less: Accumulated depreciation Patents $ 103,000 205,000 152.000 84,000 540,000 (201,000) 33,300 $ 916,300 59,600 3,600 198,000 s 75,500 138,800 211,600 87.600 738,000 (204,000) 27.750 $ 1,075,250 3,000 5,550 44 300 195,000 Total Assets Liabilities & Equity Accounts payable Bonds payable Common stock Retained earnings Noncontrolling interest Total Liabilities & Equity Cash Flows from Operating Activities: Consolidated not income Amortization expense Depreciation expense Decrease in accounts receivable Increase in inventory Decrease in Arns navalla 165.540 86,000 260,000 286.000 118,760 s 916,300 BO 121 240 281,000 260.000 299, 110 113,900 $ 1,075,250 63,000 15,200 S 383,700 76,110 10,340 $ 383,700 $ 86.450 5,550 76,000 66 200 59,600 260.000 286,000 118,760 $ 916,300 63,000 15,200 $ 383,700 76,110 10,340 $ 383,700 260,000 299,110 113,900 $ 1,075,250 $ 86,450 5,550 76,000 66 200 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 59,600 44,300 3,600 195,000 3,000 63,000 15,200 195,000 27,500 X $ 411,200 $ 429,200