Compute the consolidated cash account at December 31, 2018.

Question

Quizplus · Accepted Answer

From the information given in the problem, we can calculate the total cash balance as follows:
- Parent company cash balance on December 31, 2018: $200
- Subsidiary cash balance on December 31, 2018: $150
- Acquisition on October 1, 2018: $120
Total cash balance = $200 (parent company) + $150 (subsidiary) + $120 (acquisition) = $470
However, we need to consider that the acquisition occurred on October 1, 2018, so only 3 months worth of cash will be consolidated into the statement of cash flows. This means that we need to subtract 3/12 of the acquisition cash balance, which is $30. 
Therefore, the consolidated cash account at December 31, 2018 is $470 - $30 = $440. However, the problem only gives answer choices in increments of $25. The closest answer choice is C) $400.

Compute the Consolidated Cash Account at December 31, 2018