Protecto Corporation purchased 75 percent of Strand Company's outstanding shares on January 1, 20X1, for $39,000 more than book value. At that date, the fair value of the noncontrolling interest was $13,000 more than 25 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 $38,000 and later in the year sold it to Protecto for $52,000. Protecto is still holding the land as an investment. During 20X3, Protecto bonds with a value of $110,000 were exchanged for equipment valued at $110,000. On January 1, 20X3, Protecto held inventory purchased previously from Strand for $50,400. During 20X3, Protecto purchased an additional $94,000 of goods from Strand and held $57,000 of this inventory on December 31, 20X3. Strand sells merchandise to the parent at cost plus a 20 percent markup. Strand also purchases inventory items from Protecto. On January 1, 20X3, Strand held inventory it had previously purchased from Protecto for $15,400, and on December 31, 20X3, it held goods it had purchased from Protecto for $9,100 during 20X3. Strand's total purchases from Protecto in 20X3 were $25,000. Protecto sells inventory to Strand at cost plus a 40 percent markup. The consolidated balance sheet at December 31, 20X2, contained the following amounts: Credit Debit $ 95,000 145,000 135,000 72,000 440,000 39,000 Cash Accounts Receivable Inventory Land Buildings and Equipment Patents Accumulated Depreciation Accounts Payable Bonds Payable Noncontrolling Interest Common Stock Retained Earnings Totals $ 211,000 164,100 94,000 58,900 120,000 278,000 $926,000 $926,000 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 Corporation Strand Company Consolidated Income Statement Sales $ 248,888 $ 428,888 (388,888) $ 94,000 25,000 $ 541,888 Less: Cost of Goods Sold (149,880) $ (328,388) 8.488 84,500 4,480 22,480 (17,880) 6,580 (27,888) (32,600) 32,850 93,85 (44,880) (6,580) (66,600) (34,880) $ 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 Less: Dividends Declared Ending Balance $ 49,000 $ 49,899 37,725 $ 163, 225 11,975 $175, 280 4,875 $124,575 1,625 $126,200 $ 104,200 (10.350) $ 93,85e $ 93,85e $165.000 175.298 $ 278.000 93,850 (54,eee) $ 317,85 $ 165.000 49.00 (21,600) $ 192.488 $126,280 21,600 $147,888 $ 278,000 93.950 (54, eee) S 317.850 $340,288 Balance Sheet Assets Cash Accounts Receivable Inventory $ $ $ 27.200 se, 480 120,280 36,000 40,480 90,480 63,200 120,00 198,580 $ 9,500 2.600 $ 32,500 32,500 Patent Investment in Subsidiary 188,95 10,500 185,775 24, 375 6, 380 4,480 14.680 Land Buildings and Equipment Less: Accumulated Depreciation 72,600 354,00 (167.000) 20,480 240.000 (88,888) 71.000 78,488 523,00 (184,289) 71, Total Assets $ 675,75 $ 339, 280 $124,788 $387,258 $ 832,488 $ Liabilities & Equity Accounts Payable Bonds Payable Common Stock Retained Earnings NCI in NA Of Strand $ 105,900 132.000 120.000 317,850 20.888 72.000 54,000 192,480 $ 54.688 340,200 3, 500 2.100 $399,888 $ 126,700 284.288 120. eee 317.850 63,850 $147,888 61.325 8,125 $ 217,258 Total Liabilities & Equity $ 675,750 $ 339,20 $ 832,480 Required: a. 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 BUERDIARY Consolidated Cash Flow Worksheet Year Ended December 31, 2018 Consoon Entries Acces Inventory TI III ng and mot Los: Accumulated depreciation Total Assets Lies & Equity Accounts payable Bonds payable Common ock Ratinadaming Non controlling intors! Total Libes & Equity Cash Flows from Operating Activities Consolidated not income Amortation expense Deprecatione Decrease in contracte Increase in inventory Decrease in contato Cash Flowstom investing A Purchase of land Auson of being and woment from bond Purchase of budings and woment Cash Flowstom Financing Acties Protect Cars son of bongsongs and met 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 SIDIARY 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