The following information was derived from the 2017 consolidated financial statements of Lime Inc., which owns 80% of Lemon Inc. as well as 40% of Zinc Inc.:
Equity Earnings from Zinc Inc.
$120,000
Decrease in Accounts Payable
$5,000
Increase in Accounts Receivable
$10,000
Increase in Inventory
$20,000
Increase in Bonds Payable
$40,000
Depreciation
$20,000
Loss on sale of machinery
$10,000
Carrying value of machinery sold
$60,000
Dividends received from Zinc Inc.
$10,000
Purchase of a building for cash
$400,000
Goodwill impairment loss
$5,000
Entity Net Income allocated to non-controlling interest
$5,000
Consolidated net income allocated to Parent
$950,000
Dividends paid by Lime Inc.
$40,000
Dividends paid by Lemon Inc.
$12,000
The cash balance at the start of 2017 was $200,000.
Required:
Prepare the consolidated statement of cash flows for Lime Inc. for the year ended December 31, 2017.
The following information was derived from the 2017 consolidated financial statements of Lime Inc., which owns 80% of Lemon Inc. as well as 40% of Zinc Inc.:
| Equity Earnings from Zinc Inc. | $120,000 |
| Decrease in Accounts Payable | $5,000 |
| Increase in Accounts Receivable | $10,000 |
| Increase in Inventory | $20,000 |
| Increase in Bonds Payable | $40,000 |
| Depreciation | $20,000 |
| Loss on sale of machinery | $10,000 |
| Carrying value of machinery sold | $60,000 |
| Dividends received from Zinc Inc. | $10,000 |
| Purchase of a building for cash | $400,000 |
| Goodwill impairment loss | $5,000 |
| Entity Net Income allocated to non-controlling interest | $5,000 |
| Consolidated net income allocated to Parent | $950,000 |
| Dividends paid by Lime Inc. | $40,000 |
| Dividends paid by Lemon Inc. | $12,000 |
The cash balance at the start of 2017 was $200,000.
Required:
Prepare the consolidated statement of cash flows for Lime Inc. for the year ended December 31, 2017.
Related questions
Miracle Tool, Inc., sells a single product (a combinationscrewdriver, pliers, hammer, and crescent wrench) exclusivelythrough television advertising. The comparative income statementsand balance sheets are for the past two years.
Additional Information
The following information regarding the companyâs operations in2018 is available from the companyâs accounting records.
Early in the year, the company declared and paid a $4,000 cashdividend.
During the year, marketable securities costing $15,000 were soldfor $14,000 cash, resulting in a $1,000 nonoperating loss.
The company purchased plant assets for $20,000, paying $2,000 incash and issuing a note payable for the $18,000 balance.
During the year, the company repaid a $10,000 note payable, butincurred an additional $18,000 in long-term debt as described inTransaction 3.
The owners invested $15,000 cash in the business as a conditionof the new loans described in Transaction 4.
| MIRACLE TOOL, INC. | ||||||||
| COMPARATIVE INCOME STATEMENT | ||||||||
| FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2018 | ||||||||
| 2017 | 2018 | |||||||
| Sales | $ | 500,000 | $ | 350,000 | ||||
| Less: Cost of goods sold | 200,000 | 140,000 | ||||||
| Gross profit on sales | $ | 300,000 | $ | 210,000 | ||||
| Less: Operating expenses(including depreciation of $34,000 in 2017 and $35,000 in 2018) | 260,000 | 243,000 | ||||||
| Loss on sale of marketablesecurities | â0â | 1,000 | ||||||
| Net income (loss) | $ | 40,000 | $ | (34,000 | ) | |||
| MIRACLETOOL, INC. COMPARATIVE BALANCE SHEETS | |||||||||||
| December31, | |||||||||||
| 2017 | 2018 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 10,000 | $ | 60,000 | |||||||
| Marketable securities | 20,000 | 5,000 | |||||||||
| Accounts receivable | 40,000 | 23,000 | |||||||||
| Inventory | 120,000 | 122,000 | |||||||||
| Plant and equipment (net ofaccumulated depreciation) | 300,000 | 285,000 | |||||||||
| Totals | $ | 490,000 | $ | 495,000 | |||||||
| Liabilities &Stockholders' Equity | |||||||||||
| Accounts payable | $ | 50,000 | $ | 73,000 | |||||||
| Accrued expenses payable | 17,000 | 14,000 | |||||||||
| Note payable | 245,000 | 253,000 | |||||||||
| Capital stock (no parvalue) | 120,000 | 135,000 | |||||||||
| Retained earnings | 58,000 | 20,000 | |||||||||
| Totals | $ | 490,000 | $ | 495,000 | |||||||
Required:
a. Prepare a worksheet for a statement of cashflows.
b. Prepare a statement of cash flows for 2018by the indirect method.
