Task 1: Preparation of Statement of Cash Flows
The accountant for Consolidated Enterprises Inc. has just finished preparing a consolidated balance sheet, income statement, and statement of changes in retained earnings for 20X3. The accountant has asked for assistance in preparing a statement of cash flows for the consolidated entity. Consolidated Enterprises holds 80 percent of the stock of Separate Way Manufacturing. The following items are proposed
for inclusion in the consolidated cash flow statement:
Decrease in accounts receivable $ 23,000
Increase in accounts payable 5,000
Increase in inventory 15,000
Increase in bonds payable 120,000
Equipment purchased 380,000
Common stock repurchased 35,000
Depreciation reported for current period 73,000
Gain recorded on sale of equipment 8,000
Book value of equipment sold 37,000
Goodwill impairment loss 3,000
Sales 900,000
Cost of goods sold 368,000
Dividends paid by parent 60,000
Dividends paid by subsidiary 30,000
Consolidated net income for the year 450,000
Income assigned to the noncontrolling interest 14,000
Required to do:
Prepare in good form a statement of cash flows for Consolidated Enterprises Inc. using the indirect method of computing income from operations.
Task 2: Direct Method Cash Flow Statement
Using the data presented above, prepare a statement of cash flows for Consolidated Enterprises Inc. using the direct method of computing cash flows from operating activities.