Asked by Fantasia Jessie on May 26, 2024
Verified
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
Consolidated Cash Account
A single cash account that combines the cash balances of a parent company and its subsidiaries to reflect total available cash.
Subsidiary Entities
Companies that are controlled by another company (parent company) through ownership of more than half of the voting power or through other means of control.
- Calculate the consolidated cash account and share capital in group financial statements.
Verified Answer
JS
Jacob SpenceJun 01, 2024
Final Answer :
C
Explanation :
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.
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.
Learning Objectives
- Calculate the consolidated cash account and share capital in group financial statements.
Related questions
Kansas Limited Has Two Subsidiary Entities, Emma Limited and Goldie \(\begin{array}{lr} \text ...
On December 31, 20X2, Pipe Ltd At December 31, 20X6, ...
In 20X5, Bing Created a Wholly Owned Subsidiary Called Bango ...
Ying Corporation Formed a New Subsidiary, Zang Limited, in 20X2 \( ...
On December 31, 20X2, Pipe Ltd At December 31, 20X6, ...