Rodriguez Company holds 80 percent of the common stock of Molina, Inc., and 30 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 2010 and 2011:
|
Rodriguez Company and Consolidated Subsidiary Molina |
||
|
2010 |
2011 |
|
|
Revenues |
$ (850,000) |
$ (980,000) |
|
Cost of goods sold |
600,000 |
640,000 |
|
Depreciation and amortization |
90,000 |
100,000 |
|
Gain on sale of building |
–0– |
(20,000) |
|
Interest expense |
30,000 |
30,000 |
|
Consolidated net income |
(130,000) |
(230,000) |
|
to noncontrolling interest |
9,000 |
11,000 |
|
to parent company |
$ (121,000) |
$ (219,000) |
|
Retained earnings, 1/1 |
$ (300,000) |
$ (371,000) |
|
Net income |
(121,000) |
(219,000) |
|
Dividends paid |
50,000 |
100,000 |
|
Retained earnings, 12/31 |
$ (371,000) |
$ (490,000) |
|
Cash |
$ 80,000 |
$ 150,000 |
|
Accounts receivable |
150,000 |
140,000 |
|
Inventory |
200,000 |
340,000 |
|
Buildings and equipment (net) |
640,000 |
690,000 |
|
Databases |
150,000 |
145,000 |
|
Total assets |
$ 1,220,000 |
$ 1,465,000 |
|
Accounts payable |
$ (140,000) |
$ (100,000) |
|
Bonds payable |
(400,000) |
(500,000) |
|
Noncontrolling interest in Molina |
(32,000) |
(41,000) |
|
Common stock |
(100,000) |
(130,000) |
|
Additional paid in capital |
(177,000) |
(204,000) |
|
Retained earnings |
(371,000) |
(490,000) |
|
Total liabilities and equities |
$(1,220,000) |
$(1,465,000) |
Additional Information for 2011
• The parent issued bonds during the year for cash.
• Amortization of databases amounts to $5,000 per year.
• The parent sold a building with a cost of $60,000 but a $30,000 book value for cash on May 11.
• The subsidiary purchased equipment on July 23 using cash.
• Late in November, the parent issued stock for cash.
• During the year, the subsidiary paid dividends of $10,000.
Prepare a consolidated statement of cash flows for this business combination for the year ending
December 31, 2011. Either the direct or the indirect approach may be used.