Pecan Corporation’s controller has just finished preparing a consolidated balance sheet, income statement, and statement of changes in retained earnings for the year ended December 31, 20X4.

 Pecan Corporation’s controller has just finished preparing a consolidated balance sheet, income statement, and statement of changes in retained earnings for the year ended December 31, 20X4. Pecan owns 60 percent of Sandy Corporation’s stock, which it acquired at underlying book value on May 7, 20X1. At that date, the fair value of the noncontrolling interest was equal to 40 percent of Sandy Corporation’s book value. You have been provided the following information:

Consolidated net income for 20X4 was $271,000.
Sandy reported net income of $70,000 for 20X4.
Pecan paid dividends of $25,000 in 20X4.
Sandy paid dividends of $15,000 in 20X4.
Pecan issued common stock on April 7, 20X4, for a total of $150,000.
Consolidated wages payable increased by $7,000 in 20X4.
Consolidated depreciation expense for the year was $21,000.
Consolidated accounts receivable decreased by $32,000 in 20X4.
Bonds payable of Pecan with a book value of $204,000 were retired for $200,000 on December 31, 20X4.
Consolidated amortization expense on patents was $13,000 for 20X4.
Pecan sold land that it had purchased for $142,000 to a nonaffiliate for $134,000 on June 10, 20X4.
Consolidated accounts payable decreased by $12,000 during 20X4.
Total purchases of equipment by Pecan and Sandy during 20X4 were $295,000.
Consolidated inventory increased by $16,000 during 20X4.
There were no intercompany transfers between Pecan and Sandy in 20X4 or prior years except for Sandy’s payment of dividends. Pecan uses the indirect method in preparing its cash flow statement.

Required:
What amount of dividends was paid to the noncontrolling interest during 20X4?

What amount will be reported as net cash provided by operating activities for 20X4?

What amount will be reported as net cash used in investing activities for 20X4?

What amount will be reported as net cash used in financing activities for 20X4?

What was the change in cash balance for the consolidated entity for 20X4?

 

Explanation
The noncontrolling interest received dividends of $6,000 ($15,000 × 0.40).

A total of $320,000 will be reported as cash provided by operations, computed as follows:

Consolidated net income    $ 271,000
Depreciation expense    21,000
Amortization of patents    13,000
Gain on bond retirement    (4,000)
Loss on sale of land    8,000
Decrease in accounts receivable    32,000
Increase in inventory    (16,000)
Decrease in accounts payable    (12,000)
Increase in wages payable    7,000
Net cash provided by operating activities    $ 320,000
Cash used in investing activities will be reported at $161,000, computed as follows:

Purchases of equipment    $ (295,000)
Sale of land    134,000
Net cash used in investing activities    $ (161,000)
Cash used in financing activities will be reported at $81,000, computed as follows:

Sale of stock    $ 150,000
Bond retirement    (200,000)
Dividends paid to Pecan Corporation shareholders    (25,000)
Dividends paid to noncontrolling interests    (6,000)
Net cash used in financing activities    $ (81,000)
The cash balance increased by $78,000 ($320,000 − $161,000 − $81,000) in 20X4.

Thanks