The following comparative consolidated trial balances apply to Pembina Company and its subsidiary Scranton Company (80% interest) for the fiscal year ended 12/31/18:

12/31/17 12/31/18
Cash $ 145,000 $ 419,000
Trading Securities Portfolio (at market) 160,000 175,000
Accounts Receivable 440,000 384,000
Inventories 525,000 542,000
Land 130,000 105,000
Plant, Property, and Equipment 660,000 680,000
Accumulated Depreciation (145,000) (188,000)
Goodwill 60,000 60,000
Current Liabilities (474,000) (502,000)
Long-Term Notes Payable (450,000) (450,000)
Deferred Taxes (35,000) (33,000)
NCI (161,000) (199,800)
Paid-In Capital (660,000) (660,000)
Retained Earnings (195,000) (332,200)

$ --- $ ---

The following events occurred during the year:
a) No trading securities were sold nor were any investments added to the portfolio.
b) Sold land, book value $25,000, for $80,000 .
c) Purchased equipment with a cost of $50,000 to replace equipment, book value $13,000, that was sold for $10,000 .
d) Dividends declared and paid: Pembina $50,000; Scranton $40,000 .
e) Consolidated net income: $234,000 .

Required:

Prepare the consolidated statement of cash flows for the year ended December 31, 2018, for Pembina and its subsidiary.

Pembina, Inc. and Subsidiary Scranton Company
Consolidated Statement of Cash Flows
For the Year Ended December 31, 2018

Cash flows from operating activities:

Consolidated net income
$ 234,000
Adjustment to reconcile net income to net cash:

Depreciation expense (1) 60,000

Mark-to-market adjustment of trading portfolio (15,000)

Deferred income tax change (2,000)

Loss on sale of property 3,000

Gain on sale of land (55,000)

Increase in inventory (17,000)

Decrease in accounts receivable 56,000

Increase in current liabilities 28,000

Total adjustments
58,000
Net cash provided by operating activities
292,000

Cash flows from investing activities:

Proceeds from sale of equipment 10,000

Proceeds from sale of land 80,000

Purchase equipment (1) (50,000)

Net cash provided by investing activities
40,000

Cash flows from financing activities:

Dividends paid (2):

By Pembina (50,000)

By Scranton, to non-controlling interest (8,000)

Net cash used by financing activities
(58,000)
Change in cash
274,000
Cash at beginning of year
145,000
Cash at year end
$ 419,000

12/31/17
12/31/18 Net Inflow (Outflow)

Cash $ 145,000 $ 419,000 $ (274,000)

Trading Securities Portfolio (at market) 160,000 175,000 (15,000)

Accounts Receivable 440,000 384,000 56,000

Inventories 525,000 542,000 (17,000)

Land 130,000 105,000 25,000

Plant, Property, and Equipment (1) 660,000 680,000 (20,000)

Accumulated Depreciation (1) (145,000) (188,000) 43,000

Goodwill 60,000 60,000 -

Current Liabilities (474,000) (502,000) 28,000

Long-Term Notes Payable (450,000) (450,000) -

Deferred Taxes (35,000) (33,000) (2,000)

NCI (2) (161,000) (199,800) 38,800

Paid-In Capital (660,000) (660,000) -

Retained Earnings (2) (195,000) (332,200) 137,200

(1) Net cash outflow for equipment = $20,000: new equipment purchased was $50,000; so cost of equipment sold was $30,000 . The net book value of the equipment sold was $13,000, so the accumulated depreciation of the equipment sold was $17,000 . The net change in accumulated depreciation was $43,000, if the accumulated depreciation relating to the item sold was $17,000, depreciation expense was $60,000 .

(2) Consolidated net income = $234,000 . The income attributable to the controlling interest is 80% of this amount or $187,200 . Since the net change in Retained earnings is $137,200, dividends were $50,000 . The income attributable to the NCI is $38,800 . Since the change in the NCI is $46,800, the dividends paid to the NCI were $8,000 .