Papa Limited has two subsidiary entities, Mumma Limited and Junior Limited. Papa Limited owns 100% of the shares in both entities. Details of the cash accounts of each company are: Papa Limited $160 000, Mumma Limited $85 000, Junior Limited $12 500. The balance of the consolidated cash account of the Papa Limited group is:
A) $97 500
B) $160 000
C) $257 500
D) $62 500

Question

Quizplus · Accepted Answer

To calculate the balance of the consolidated cash account, we need to add the individual cash balances of the subsidiaries to the parent company's cash balance. Therefore, the calculation would be:

Consolidated cash account balance = Papa Limited cash account balance + Mumma Limited cash account balance + Junior Limited cash account balance
Consolidated cash account balance = $160 000 + $85 000 + $12 500
Consolidated cash account balance = $257 500

Therefore, the best choice is C - $257 500.

Papa Limited Has Two Subsidiary Entities, Mumma Limited and Junior