Tower Corporation's Controller Has Just Finished Preparing a Consolidated Balance

question 27

Multiple Choice

Tower 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, 20X9. Tower owns 80 percent of Network Corporation's stock, which it acquired at underlying book value on November 1, 20X6. At that date, the fair value of the noncontrolling interest was equal to 20 percent of Network Corporation's book value. The following information is available:
Consolidated net income for 20X9 was $160,000.
Network reported net income of $50,000 for 20X9.
Tower paid dividends of $30,000 in 20X9.
Network paid dividends of $10,000 in 20X9.
Tower issued common stock on February, 18, 20X9, for a total of $100,000.
Consolidated wages payable decreased by $6,000 in 20X9.
Consolidated depreciation expense for the year was $15,000.
Consolidated accounts receivable decreased by $20,000 in 20X9.
Bonds payable of Tower with a book value of $102,000 were retired for $100,000 on December 31, 20X9.
Consolidated amortization expense on patents was $10,000 for 20X9.
Tower sold land that it had purchased for $75,000 to a nonaffiliate for $80,000 on June 10, 20X9.
Consolidated accounts payable decreased by $7,000 during 20X9.
Total purchases of equipment by Tower and Network during 20X9 were $180,000.
Consolidated inventory increased by $36,000 during 20X9.
There were no intercompany transfers between Tower and Network in 20X9 or prior years except for Network's payment of dividends. Tower uses the indirect method in preparing its cash flow statement.
Based on the preceding information, what amount will be reported in the consolidated cash flow statement as net cash used in financing activities for 20X9?

• A) $32,000
• B) $38,000
• C) $42,000
• D) $70,000

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Definitions:

Monozygotic Twins

Identical twins that develop from a single fertilized egg and share 100% of their genetic material, leading to nearly identical physical traits and often similar behavior.

Dizygotic Twins

Twins that are formed from two different eggs fertilized by two different sperm, making them genetically similar to siblings born at different times.

IQ

Intelligence Quotient, a numerical measure of a person's relative intelligence determined through various standardized tests.

Canalized Trait

A characteristic that is genetically determined to a high degree, showing little variation in the population due to environmental influences.