REQUIRED1. Prepare a consolidated balance sheet for Pen Corporation and Subsidiary at December 31, 2011.2. Compute consolidated net income for 2012 assuming that Pen Corporation reported separate income of $680,000 and Sut Company reported net income of $360,000. (Separate incomes do not include income from the investment in Sut.) Р 3-1Prepare a consolidated balance sheet at acquisition and compute consolidatednet income one year laterOn December 31, 2011, Pen Corporation purchased 80 percent of the stock of Sut Company at bookvalue. The data reported on their separate balance sheets immediately after the acquisition follow. AtDecember 31, 2011, Pen Corporation owes Sut $20,000 on accounts payable. (All amounts are inthousands.)PenSutAssetsCashAccounts receivable$ 128$ 72136180Inventories572224Investment in Sut8001,520$3,200Equipment–net700$1,132Liabilities and Stockholders' EquityAccounts payableCommon stock, $20 parRetained earnings$ 1601,8401,200$3,200$ 132600400$1,132REQUIRED1. Prepare a consolidated balance sheet for Pen Corporation and Subsidiary at December 31, 2011.2. Compute consolidated net income for 2012 assuming that Pen Corporation reported separate income of$680,000 and Sut Company reported net income of $360,000. (Separate incomes do not include incomefrom the investment in Sut.)

Consolidated balance sheet is the balance sheet that involves the balances of the Parent company and…

Answered: Prepare a consolidated balance sheet…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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REQUIRED

1. Prepare a consolidated balance sheet for Pen Corporation and Subsidiary at December 31, 2011.

2. Compute consolidated net income for 2012 assuming that Pen Corporation reported separate income of $680,000 and Sut Company reported net income of $360,000. (Separate incomes do not include income from the investment in Sut.)

Р 3-1
Prepare a consolidated balance sheet at acquisition and compute consolidated
net income one year later
On December 31, 2011, Pen Corporation purchased 80 percent of the stock of Sut Company at book
value. The data reported on their separate balance sheets immediately after the acquisition follow. At
December 31, 2011, Pen Corporation owes Sut $20,000 on accounts payable. (All amounts are in
thousands.)
Pen
Sut
Assets
Cash
Accounts receivable
$ 128
$ 72
136
180
Inventories
572
224
Investment in Sut
800
1,520
$3,200
Equipment–net
700
$1,132
Liabilities and Stockholders' Equity
Accounts payable
Common stock, $20 par
Retained earnings
$ 160
1,840
1,200
$3,200
$ 132
600
400
$1,132
REQUIRED
1. Prepare a consolidated balance sheet for Pen Corporation and Subsidiary at December 31, 2011.
2. Compute consolidated net income for 2012 assuming that Pen Corporation reported separate income of
$680,000 and Sut Company reported net income of $360,000. (Separate incomes do not include income
from the investment in Sut.)

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