P 3-1 Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later On December 31, 2016, Pam Corporation purchased 80 percent of the stock of Sun Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2016, Pam Corporation owes Sun $20,000 on accounts payable. (All amounts are in thousands.)   Pam Sun Assets     Cash $ 128         $ 72         Accounts receivable 180         136         Inventories 572         224         Investment in Sun 800           Equipment—net 1,520         700           $3,200         $1,132         Liabilities and Stockholders’ Equity     Accounts payable $ 160         $ 132         Common stock, $20 par 1,840         600         Retained earnings 1,200         400           $3,200         $1,132         Required Prepare a consolidated balance sheet for Pam Corporation and Subsidiary at December 31, 2016. Compute consolidated net income for 2017 assuming that Pam Corporation reported separate income of $680,000 and Sun Company reported net income of $360,000. (Separate incomes do not include income from the investment in Sun.)

Question

P 3-1 Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later

On December 31, 2016, Pam Corporation purchased 80 percent of the stock of Sun Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2016, Pam Corporation owes Sun $20,000 on accounts payable. (All amounts are in thousands.)

 

Pam

Sun

Assets

 

 

Cash

$ 128        

$ 72        

Accounts receivable

180        

136        

Inventories

572        

224        

Investment in Sun

800        

 

Equipment—net

1,520        

700        

 

$3,200        

$1,132        

Liabilities and Stockholders’ Equity

 

 

Accounts payable

$ 160        

$ 132        

Common stock, $20 par

1,840        

600        

Retained earnings

1,200        

400        

 

$3,200        

$1,132        

Required

  1. Prepare a consolidated balance sheet for Pam Corporation and Subsidiary at December 31, 2016.

  2. Compute consolidated net income for 2017 assuming that Pam Corporation reported separate income of $680,000 and Sun Company reported net income of $360,000. (Separate incomes do not include income from the investment in Sun.)

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.
Tagged in
BusinessAccounting

Final Accounts

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: Tettleton Company incurred the following costs during the current year in con- nection with its rese...

A: The accounting for research and development specifies that expenditures incurred in this process sha...

Q: Pharoah Company sells merchandise on account for $3500 to Riverbed Company with credit terms of 2/15...

A: Calculate the amount of check.

Q: Hidden Hollow Mining Co. acquired mineral rights for $42,000,000. The mineral deposit is estimated a...

A: Formula to compute depletion rate:

Q: On March 3, Bridgeport Corp. sells $768,500 of its receivables to Western Factors Inc. Western Facto...

A: Prepare journal entry to record the sale of the receivables on Bridgeport Corp.’ books.

Q: David Jackson invests $40,200 at 8% annual interest, leaving the money invested without withdrawing ...

A: Investment: $40,200Interest Rate: 8%Formula: Amount of investment * Future value Factor

Q: What is meant by contingent Liability? How is it shown in final accounts?

A: Liabilities: The claims creditors have over assets or resources of a company are referred to as liab...

Q: Palmer, owner of Palmer Interiors, is negotiating for the purchase of Ruth Inc. The balance sheet of...

A: Determine correct value of land and equipment.

Q: --/1 Question 14 View Policies Current Attempt in Progress port Rooney Small Engine Repair charges $...

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This bra...

Q: At the end of 2021, Kingbird Co. has accounts receivable of $691,500 and an allowance for doubtful a...

A: (a)Entry to record the write off.