Consolidation of cash, detailed solution
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Aedion Company owns control over Breedlove, Inc. Aedion reports sales of $300,000 during 2004 while Breedlove reports $200,000. Inventory costing $20,000 was transferred from Breedlove to Aedion (upstream) during the year for $40,000. Of this amount, 25 percent is still in ending inventory at year's end. Total receivables on the consolidated balance sheet were $80,000 at the first of the year and $110,000 at year-end. No intercompany debt existed at the beginning or ending of the year. Using the direct approach, what is the consolidated amount of cash collected by the business combination from its customers?
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