Protecto Corporation purchased 60 percent of Strand Company's outstanding shares on January 1, 20X1, for $27,100 more than book value. At that date, the fair value of the noncontrolling interest was $16,900 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 $68,000 and later in the year sold it to Protecto for $81,000. Protecto is still holding the land as an investment. During 20X3, Protecto bonds with a value of $185,000 were exchanged for equipment valued at $185,000.

On January 1, 20X3, Protecto held inventory purchased previously from Strand for $51,000. During 20X3, Protecto purchased an additional $108,000 of goods from Strand and held $67,000 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 $20,300, and on December 31, 20X3, it held goods it had purchased from Protecto for $8,700 during 20X3. Strand's total purchases from Protecto in 20X3 were $25,000. Protecto sells inventory to Strand at cost plus a 45 percent markup.

The consolidated balance sheet at December 31, 20X2, contained the following amounts:

Debit Credit

Cash $101,000

Accounts Receivable 195,000

Inventory 151,000

Land 82,000

Buildings and Equipment 520,000

Patents 33,000

Accumulated Depreciation $212,000

Accounts Payable 142,080

Bonds Payable 90,000

Noncontrolling Interest 113,920

Common Stock 240,000

Retained Earnings 284,000

Totals $1,082,000 $1,082,000

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

December 31, 20X3

Consolidation Entries

Protecto CorporationStrand CompanyDRCR

ConsolidatedIncome Statement

Sales$510,000$400,000$108,000$777,00025,000Less: Cost of Goods Sold(385,000)(280,000)$10,200(531,600)94,6006,30022,300Less: Depreciation Expense(41,000)(31,000)(72,000)Less: Amortization Expense5,500(5,500)Less: Other Expense(35,800)(50,000)(85,800)Income from Strand Co.21,78025,0803,3000Consolidated Net Income$69,980$39,000$163,580$136,700$82,100NCI in Net Income of Strand14,3202,200(12,120)Controlling Interest in Net Income$69,980$39,000$177,900$138,900$69,980Statement of Retained EarningsBeginning Balance$284,000$195,000$195,000$284,000Net Income69,98039,000177,900$138,90069,980Less: Dividends Declared(61,000)(36,000)36,000(61,000)Ending Balance$292,980$198,000$372,900$174,900$292,980Balance SheetAssetsCash$30,600$43,500$74,100Accounts Receivable93,00043,400136,400Inventory132,00093,200$13,400209,1002,700Patent$27,50027,500Investment in Subsidiary164,7607,800168,48006,12016,5006,300Land77,00023,20013,00087,200Buildings and Equipment487,000290,00071,000706,000Less: Accumulated Depreciation(182,000)(102,000)71,000(213,000)0Total Assets$802,360$391,300$118,720$285,080$1,027,300Liabilities & EquityAccounts Payable$89,380$18,300$107,680Bonds Payable180,00095,000275,000Common Stock240,00080,000$80,000240,000Retained Earnings292,980198,000372,900$174,900292,980NCI in NA of Strand5,200109,920111,6404,08011,000Total Liabilities & Equity$802,360$391,300$462,180$295,820$1,027,300

Complete a worksheet for a consolidated statement of cash flows for 20X3 using the indirect method

Complete a consolidated statement of cash flows for 20X3