Protecto Corporation purchased 80 percent of Strand Company's outstanding shares on January 1 20x1, for $27,200 more than book value. At that date, the fair value of the noncontrolling interest was $16,800 more than 20 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 plece of land for $52,000 and later in the year sold it to Protecto for $74,000. Protecto is still holding the land as an investment. During 20X3, Pratecto bonds with a value of $145,000 were exchanged for equipment valued at $145.000. On January 1, 20X3. Protecto held inventory purchased previously from Strand for $47.000. During 20X3, Protecto purchased an additional $100,000 of goods from Strand and held $55,000 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 $14,400, and on December 31, 20X3, it held goods it had purchased from Protecto for $6.900 during 20X3. Strand's total purchases from Protecto in 20x3 were $32,000. Protecto sells inventory to Strand at cost plus a 50 percent markup. The consolidated balance sheet at December 31, 20X2. contained the following amounts: Debit Credit Cash 5 33,000 Accorata Receivable 155,000 Inventory 192,500 Land 74.000 Building and Equipment 440,000 Beerelated Depreciation 33,000 $204,000 Account Payable 170, 980 Dands Payable 96,ODD Nancontrolling Internet 40,520 Como Stock 160, ODD Retained Earnings 276,000 Totala = 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 STRAS COMPANY Consolidation Worksheet December 31, 20X3 Consolidation Eston Protecto Strand Corporation Company DER Connolidated Income Statest Sales 5430, DDD $ 320,000 $100, DD $ 18,000 32, DD LEE Coat of Gooda Sold 345, DDD) 1200,000) 59,400 (412,100) 32,0DD 4,BDD Lees: Depreciation Experte [33, DDD) 23, DDD) 29, 70D (56,000) Lees: Amortization Expert 5,5DE (5,500 ) LEER: Other Expense [36, EDD) [42,DO) (78,60 Income from Strand Co. 40,320 45.220 4.400 Consolidated Het Income 35,00 MCI I Net Income at Stred 10,6 1.100 (9,500) 55,00 Controlling Interest in Set Income 919191 20,220 Statement of Retained Earniaga Degising Balance 5 276, DDD $ 155,00 $155, $ 276,000 Net Inco 56,220 55,000 193,400 5138,400 36,220 153,0D) LEEE: Dividenda Declared $ 120,000) 20.000 (53,000 Ending Balance , Balasce Sheet Assets Canh $ 29,00D $ 39,50D $ 4,500 Account Receivable as, DDD 41, BDD 126,00 Inventory 124, DDD 91,600 5 11,0DD 202,300 2,300 $ 27,50 Investment in Studiary 175,70D 27,500 17.68 133,620 0 7.520 22,0DD 4, BD Land 79, DDD 21, EDD 22,0DD 78,600 Buildinga and Equipment 416, DDD ( 225,00 63,ODD 378,000 Less: Accumulated Depreciation (174, DDD) 186,000) 63 63,00 (197,000) 373, 3120, W.YO Total dat Liabilities Equity Account Payable $ 131,480 5 28,500 $ 159,900 Donde Payable 164, DDD 77. DDD 241,000 Como Stock 160,000 46, DDD $ 46, DD 160,000 Retised Earnings 279,220 NCI SA NA at Strand 182,000 340,400 5166,400 279,220 4,400 45,280 44.500 1. 5,500 Total Liabilities & Equity UU, BET 5217 , 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 SUBSIDIARY Consolidated Cash Flow Worksheet Year Ended December 31, 20X3 Consolidation Entries Balance Debit Credit 1/1/X3 Balance 12/31/X3 Assets Cash Accounts receivable Inventory Land Buildings and equipment Les Acomod depreciation Patents Total Assets dalam Liabilities & Equity Accounts payable Bonds payable cm Common stock Retained eaming Non controlling inter! Total Liabilities & Equity Cash Flows from operating Activities Consolidated net income Amortion opens Depreciation expense Decrease in conceivable Increase in inventory Decrease in accounts payable Cash Flows from investing Activities: Purchase of land Acquisition of buidings and equipment from bond issue Purchase of buildings and man Cash Flows from Financing Movies Dividends Paid To Protecto Corp. shareholders To non controlling Shareholders issuance of bonds for buildings and met Decrease in cash 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 noncashier Changes in operasing assets and liabilities Cash Flows from investing Activities Cash Flows from Financing Activities Dividends Paid