The Following Information Has Been Taken from the Consolidation Worksheet

question 44

Multiple Choice

The following information has been taken from the consolidation worksheet of Graham Company and its 80% owned subsidiary, Stage Company.
(1) ) Graham reports a loss on sale of land of $5,000. The land cost Graham $20,000.
(2) ) Non-controlling interest in Stage's net income was $30,000.
(3) ) Graham paid dividends of $15,000.
(4) ) Stage paid dividends of $10,000.
(5) ) Excess acquisition-date fair value over book value was expensed by $6,000.
(6) ) Consolidated accounts receivable decreased by $8,000.
(7) ) Consolidated accounts payable decreased by $7,000.
Using the indirect method, where does the decrease in accounts receivable appear in a consolidated statement of cash flows?

• A) $8,000 increase to net income as an operating activity.
• B) $8,000 decrease to net income as an operating activity.
• C) $6,400 increase to net income as an operating activity.
• D) $6,400 decrease to net income as an operating activity.
• E) $8,000 increase as an investing activity.

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