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 $21,700, 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 Cash $ 103, Gee Accounts Receivable 205, 090 Inventory 152, 090 Land 84, 980 Buildings and Equipment 540, 098 Patents 33, 308 Accumulated Depreciation 201, 090 Accounts Payable 165, 540 Bonds Payable 86, 908 Noncontrolling Interest 118, 768 Common Stock 260, 090 Retained Earnings 286, 090 Totals $1, 117, 309 $1, 117,308PROTECTO CORPORATION AND STRAND COMPANY Consolidation Worksheet December 31, 2603 Consolidation Entries Protecto Strand Corporation Company DR OR Consolidated Income Statement Sales $ 530, 200 $ 420, 060 $110,090 $ 813,060 27,006 Less: Cost of Goods Sold (395, 060) (300, 060) $ 10,409 (557,408) 96, 090 6,206 25, 090 Less: Depreciation Expense (43, 090) (33,090) (76, 200) Less: Amortization Expense 5,550 (5,550) Less: Other Expense (35,600) (52,090) (87, 600) Income from Strand Co. 19,710 23, 040 3,330 Consolidated Net Income $ 76, 110 35,090 $165,590 $140, 930 86, 450 NCI in Net Income of Strand 12,560 2, 220 (10, 340) Controlling Interest in Net Income 76,119 35,080 $178, 150 $143, 150 76, 110 Statement of Retained Earnings Beginning Balance $ 286,209 $ 205,906 $ 205,090 $ 286,090 Net Income 76, 116 35,006 178, 150 $143, 156 76,116 Less: Dividends Declared (63, 090) (38, 090) 38,806 (63,200) Ending Balance $ 299,110 $ 202,600 $383, 150 $181, 156 299, 110 Balance Sheet Assets Cash 31,060 44,508 $ 75,506 Accounts Receivable 95,080 43,290 138, 890 Inventory 93, 606 $ 14,090 211, 606 2,609 Patent $ 27,750 Investment in Subsidiary 168, 856 173, 649 27,750 6, 240 16, 650 6, 200 Land 79,090 23, 609 87, 606 Buildings and Equipment 511,006 300, 006 73, 006 738,006 Less: Accumulated Depreciation (106, 008) 73,096 (204, 208) Total Assets $ 847, 850 399,500 $122, 190 $ 294 , 290 $1, 075, 250 Liabilities & Equity Accounts Payable $ 184, 748 16,506 121, 246 Bonds Payable 184, 809 97, 800 281,890 Common Stock 260, 090 84, 906 $ 84, 090 260, 090 Retained Earnings 299, 116 202, 906 383, 156 $181, 150 299, 116 NCI in NA of Strand 6,090 112,968 113,906 4,160 11, 106 Total Liabilities & Equity $ 847 , 850 $ 399,500 $477. 310 $305, 210 $1, 075, 250 Concolldated Cash Flow Workchant Year Ended December $1, 20X3 Concoldation Entries Itam Balance Debit Credit Bulanoa 12610 Acceto $ Accounts moochable Inventory Land Buildings and equipment Less: Accumulated depreciation Paints Total Acceto Accounts payable Bonds payable Common Stock Noncontroling intomeal Total Liabilities & Equilt $ 0 $ 0 $ Cash Flows from Opening Activities Consolidated net income Amortization expanse Dapredation expense Docranea in nomounts morivable honease in inventory Decrease in homounts payable Cash Flows from Investing Activities: Purchase of land Acquisition of buildings and aquipment from bond isrun Purchase of buildings and aquipment With Flows from Financing Activities: Dividends Paid To Protecto Corp. shareholders To noncontroling shamholows lasunnon of bonds for buildings and equipment 0 $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 DE Cash Flows from Investing Activities: Cash Flows from Financing Activities: Dividends Paid: Cash balance at beginning of year Cash balance at end of year