E 4-3 General problems 1. Pam Corporation owns a 70 percent interest in Sun Corporation, acquired several years ago at book value. On December 31, 2016, Sun mailed a check for $80,000 to Pam in part payment of an $160,000 account with Pam. Pam had not received the check when the books were closed on December 31. Pam had accounts receivable of $1,200,000 (including the $160,000 from Sun), and Sun had accounts receivable of $1,760,000 at year-end. In the consolidated balance sheet of Pam Corporation and Subsidiary at December 31, 2016, accounts receivable will be shown at what amount? Use the following information in answering questions 2 and 3. Pam Corporation purchased a 70 percent interest in Sun Corporation on January 1, 2016, for $112,000, when Sun’s stockholders’ equity consisted of $24,000 common stock, $80,000 additional paid-in capital, and $16,000 retained earnings. Income and dividend information for Sun is as follows: 2016 2017 2018 Net income (or loss) $8,000 $1,600 $(4,000) Dividends 3,200 800 — 2. Pam reported income of $96,000 for 2018. This does not include income from Sun. What is consolidated net income for 2018? 3. What is Pam’s Investment in Sun balance at December 31, 2018, under the equity method?
E 4-3 General problems
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1. Pam Corporation owns a 70 percent interest in Sun Corporation, acquired several years ago at book value. On December 31, 2016, Sun mailed a check for $80,000 to Pam in part payment of an $160,000 account with Pam. Pam had not received the check when the books were closed on December 31. Pam had accounts receivable of $1,200,000 (including the $160,000 from Sun), and Sun had accounts receivable of $1,760,000 at year-end. In the consolidated
balance sheet of Pam Corporation and Subsidiary at December 31, 2016, accounts receivable will be shown at what amount?Use the following information in answering questions 2 and 3.
Pam Corporation purchased a 70 percent interest in Sun Corporation on January 1, 2016, for $112,000, when Sun’s
stockholders’ equity consisted of $24,000 common stock, $80,000 additional paid-in capital, and $16,000retained earnings . Income and dividend information for Sun is as follows:2016
2017
2018
Net income (or loss)
$8,000
$1,600
$(4,000)
Dividends
3,200
800
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2. Pam reported income of $96,000 for 2018. This does not include income from Sun. What is consolidated net income for 2018?
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3.
What is Pam’s Investment in Sun balance at December 31, 2018, under the equity method?
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