Question

Bolero Company holds 75 percent of the common stock of Rivera, Inc., and 40 percent of this subsidiary’s convertible bonds. The following consolidated financial statements are for 2017 and 2018:

	2017				2018
Revenues	$	(945,000	)		$	(1,075,000	)
Cost of goods sold		619,000				659,000
Depreciation and amortization		109,000				138,000
Gain on sale of building		0				(39,000	)
Interest expense		49,000				49,000
Consolidated net income		(168,000	)			(268,000	)
to noncontrolling interest		28,000				30,000
to parent company	$	(140,000	)		$	(238,000	)
Retained earnings, 1/1	$	(319,000	)		$	(390,000	)
Net income		(140,000	)			(238,000	)
Dividends declared		69,000				119,000
Retained earnings, 12/31	$	(390,000	)		$	(509,000	)
Cash	$	99,000			$	198,000
Accounts receivable		188,000				159,000
Inventory		219,000				378,000
Buildings and equipment (net)		659,000				737,000
Databases		188,000				164,000
Total assets	$	1,353,000			$	1,636,000
Accounts payable	$	(161,000	)		$	(128,000	)
Bonds payable		(419,000	)			(538,000	)
Noncontrolling interest in Rivera		(51,000	)			(70,000	)
Common stock		(136,000	)			(149,000	)
Additional paid-in capital		(196,000	)			(242,000	)
Retained earnings		(390,000	)			(509,000	)
Total liabilities and equities	$	(1,353,000	)		$	(1,636,000	)

Additional Information for 2018

The parent issued bonds during the year for cash.

Amortization of databases amounts to $24,000 per year.

The parent sold a building with a cost of $98,000 but a $49,000 book value for cash on May 11.

The subsidiary purchased equipment on July 23 for $241,000 in cash.

Late in November, the parent issued stock for cash.

During the year, the subsidiary paid dividends of $44,000. Both parent and subsidiary pay dividends in the same year as declared.

Prepare a consolidated statement of cash flows for this business combination for the year ending December 31, 2018. (Use indirect method)

PLEASE SHOW ALL WORK AND STEPS TO GET EACH ANSWER, THANK YOU

Answer 1

BOLERO COMPANY AND CONSOLIDATED SUBSIDIARY RIVERA

Consolidated Statement of Cash Flows

Year Ending December 31, 2018

CASH FLOWS FROM OPERATING ACTIVTIES
Consolidated net income		268000
Adjustment from accrual to cash:
Depreciation and amortization		138000
Gain on sale of building		(39000)
Decrease in accounts receivable (188000-159000)		29000
Increase in inventory (219000-378000)		(159000)
Decrease in accounts payable (128000-161000)		(33000)
Net cash flow from operating activities		204000
CASH FLOWS FROM INVESTING ACTIVITIES
Sale of building (49000+39000)	88000
Purchase of equipment (given)	(241000)
Net cash flow from investing activities		(153000)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (119000+44000)	(163000)
Issuance of bonds (538000-419000)	119000
Issuance of common stock (149000-136000)+(242000-196000)	59000
Net cash flow from financing activities		15000
Net increase in cash during 2018		66000