Pam Corporation paid $190,000 for 40 percent of Sun Corporation's outstanding voting common stock on July 1, 2016. Sun's stockholders' equity on January 1, 2016, was $250,000, consisting of $150,000 capital stock and $100,000 retained earnings. During 2016, Sun reported net income of $50,000, and on November 1, 2016, Sun declared dividends of $25,000. Sun's assets and liabilities were stated at fair values on July 1, 2016, except for land that was undervalued by S15,000 and equipment with a five-year remaining useful life that was undervalued by $25,000. REQUIRED: Prepare all the journal entries (other than closing entries) on the books of Pam Corporation during 2016 to account for the investment in Sun.
Pam Corporation paid $190,000 for 40 percent of Sun Corporation's outstanding voting common stock on July 1, 2016. Sun's stockholders' equity on January 1, 2016, was $250,000, consisting of $150,000 capital stock and $100,000 retained earnings. During 2016, Sun reported net income of $50,000, and on November 1, 2016, Sun declared dividends of $25,000. Sun's assets and liabilities were stated at fair values on July 1, 2016, except for land that was undervalued by S15,000 and equipment with a five-year remaining useful life that was undervalued by $25,000. REQUIRED: Prepare all the journal entries (other than closing entries) on the books of Pam Corporation during 2016 to account for the investment in Sun.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:P2-4
Journal entries for midyear Investment (excess allocated to land, equipment, and
goodwill)
Pam Corporation paid $190,000 for 40 percent of Sun Corporation's outstanding voting common stock
on July 1, 2016. Sun's stockholders' equity on January 1, 2016, was $250,000, consisting of $150,000
capital stock and $100,000 retained eamings.
During 2016, Sun reported net income of $50,000, and on November 1, 2016, Sun declared
dividends of $25,000.
Sun's assets and liabilities were stated at fair values on July 1, 2016, except for land that was
undervalued by S15,000 and equipment with a five-year remaining useful life that was undervalued
by $25,000.
REQUIRED: Prepare all the journal entries (other than closing entries) on the books of Pam Corporation
during 2016 to account for the investment in Sun.
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