P 5-1 Consolidated income and retained earnings (upstream sales, noncontrolling interest) Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3,600,000 on January 1, 2016, when Sun had capital stock of $3,000,000 and retained earnings of $1,000,000 The December 31, 2016 and 2017, inventories of Pam included merchandise acquired from Su of $300,000 and $400,000, respectively. Sun realizes a gross profit of 40 percent on all merchandis sold. During 2016 and 2017, sales by Sun to Pam were $600,000 and $800,000, respectively. Summary adjusted trial balances for Pam and Sun at December 31, 2017, follow (in thousands): Pam Sun Cash $ 1,000 $ 200 2,000 500 Receivables net Inventories 2,400 1,000 Plant assets net 2,500 4,800 Investment in Sun-90% 4,356 Cost of sales 8,000 3,900 3,400 1,600 Other expenses Dividends 1,000 500 $24,656 $ 12,500 Pam Sun $1,500 $ 900 Accounts payable Other liabilities 600 600 5,000 3,000 3,692 1,500 Capital stock, $10 par Retained earnings Sales Income from Sun 13,000 6,500 864 $24,656 $12,500 REQUIRED: Prepare a combined consolidated income and retained earnings statement for Pam Corporation and Subsidiary for the year ended December 31, 2017.
P 5-1 Consolidated income and retained earnings (upstream sales, noncontrolling interest) Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3,600,000 on January 1, 2016, when Sun had capital stock of $3,000,000 and retained earnings of $1,000,000 The December 31, 2016 and 2017, inventories of Pam included merchandise acquired from Su of $300,000 and $400,000, respectively. Sun realizes a gross profit of 40 percent on all merchandis sold. During 2016 and 2017, sales by Sun to Pam were $600,000 and $800,000, respectively. Summary adjusted trial balances for Pam and Sun at December 31, 2017, follow (in thousands): Pam Sun Cash $ 1,000 $ 200 2,000 500 Receivables net Inventories 2,400 1,000 Plant assets net 2,500 4,800 Investment in Sun-90% 4,356 Cost of sales 8,000 3,900 3,400 1,600 Other expenses Dividends 1,000 500 $24,656 $ 12,500 Pam Sun $1,500 $ 900 Accounts payable Other liabilities 600 600 5,000 3,000 3,692 1,500 Capital stock, $10 par Retained earnings Sales Income from Sun 13,000 6,500 864 $24,656 $12,500 REQUIRED: Prepare a combined consolidated income and retained earnings statement for Pam Corporation and Subsidiary for the year ended December 31, 2017.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3,600,000
on January 1, 2016, when Sun had capital stock of $3,000,000 and
The December 31, 2016 and 2017, inventories of Pam included merchandise acquired from Sun
of $300,000 and $400,000, respectively. Sun realizes a gross profit of 40 percent on all merchandise
sold. During 2016 and 2017, sales by Sun to Pam were $600,000 and $800,000, respectively.
Summary adjusted
thousands): Pam Sun
Cash $ 1,000 $ 200
Receivables—net 2,000 500
Inventories 2,400 1,000
Plant assets—net 2,500 4,800
Investment in Sun—90% 4,356 —
Cost of sales 8,000 3,900
Other expenses 3,400 1,600
Dividends 1,000 500
$24,656 $ 12,500
Pam Sun
Accounts payable $ 1,500 $ 900
Other liabilities 600 600
Capital stock, $10 par 5,000 3,000
Retained earnings 3,692 1,500
Sales 13,000 6,500
Income from Sun 864 —
$24,656 $12,500
Transcribed Image Text:P 5-1
Consolidated income and retained earnings (upstream sales, noncontrolling interest)
Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3,600,000
on January 1, 2016, when Sun had capital stock of $3,000,000 and retained earnings of $1,000,000.
The December 31, 2016 and 2017, inventories of Pam included merchandise acquired from Sun
of $300,000 and $400,000, respectively. Sun realizes a gross profit of 40 percent on all merchandise
sold. During 2016 and 2017, sales by Sun to Pam were $600,000 and $800,000, respectively.
Summary adjusted trial balances for Pam and Sun at December 31, 2017, follow (in
thousands):
Pam
Sun
$ 1,000
2,000
2,400
2,500
Cash
Receivables-net
Inventories
$ 200
500
1,000
4,800
Plant assets net
Investment in Sun–90%
4,356
8,000
3,400
1,000
$24,656
Cost of sales
Other expenses
Dividends
3,900
1,600
500
$ 12,500
Pam
Sun
$ 1,500
$ 900
600
Accounts payable
Other liabilities
Capital stock, $10 par
Retained earnings
600
5,000
3,692
13,000
3,000
1,500
6,500
Sales
Income from Sun
864
$24,656
$12,500
REQUIRED: Prepare a combined consolidated income and retained earnings statement for Pam Corporation
and Subsidiary for the year ended December 31, 2017.
Transcribed Image Text:P 5-1
Consolidated income and retained earnings (upstream sales, noncontrolling interest)
Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3,600,000
on January 1, 2016, when Sun had capital stock of $3,000,000 and retained earnings of $1,000,000.
The December 31, 2016 and 2017, inventories of Pam included merchandise acquired from Sun
of $300,000 and $400,000, respectively. Sun realizes a gross profit of 40 percent on all merchandise
sold. During 2016 and 2017, sales by Sun to Pam were $600,000 and $800,000, respectively.
Summary adjusted trial balances for Pam and Sun at December 31, 2017, follow (in
thousands):
Pam
Sun
$ 1,000
2,000
2,400
2,500
Cash
Receivables-net
Inventories
$ 200
500
1,000
4,800
Plant assets net
Investment in Sun–90%
4,356
8,000
3,400
1,000
$24,656
Cost of sales
Other expenses
Dividends
3,900
1,600
500
$ 12,500
Pam
Sun
$ 1,500
$ 900
600
Accounts payable
Other liabilities
Capital stock, $10 par
Retained earnings
600
5,000
3,692
13,000
3,000
1,500
6,500
Sales
Income from Sun
864
$24,656
$12,500
REQUIRED: Prepare a combined consolidated income and retained earnings statement for Pam Corporation
and Subsidiary for the year ended December 31, 2017.
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