E 7-11Consolidated income statement (constructive retirement of all subsidiary bonds)Comparative income statements for Pam Corporation and its 80 percent-owned subsidiary, SunCorporation, for the year ended December 31, 2017, are summarized as follows:PamSunSales$1,200,000$600,000Income from Sun260,800Bond interest income (Includes discount amortization)91,000(750,000)(200,000)Cost of salesOperating expensesBond interest expense(200,000)(200,000)(60,000)$140,000Net income$ 601,800Pam purchased its 80 percent interest in Sun at book value on January 1, 2016, whenSun's assets and liabilities were equal to their fair values.On January 1, 2017, Pam paid $783,000 to purchase all of Sun's $1,000,000, 6 percentoutstanding bonds. The bonds were issued at par on January 1, 2015, pay interest semiannuallyon June 30 and December 31, and mature on December 31, 2023.Required: Prepare a consolidated income statement for Pam Corporation and Subsidiaryfor the year ended December 31, 2017.Activate WGo to Setting

Consolidated Income Statement Particulars Amount Sales 1,800,000 Less: Cost of Sales 950,000…

Answered: Required: Prepare a consolidated income…

Required: Prepare a consolidated income statement for Pam Corporation and Subsidiary for the year ended December 31, 2017.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

E 7-11
Consolidated income statement (constructive retirement of all subsidiary bonds)
Comparative income statements for Pam Corporation and its 80 percent-owned subsidiary, Sun
Corporation, for the year ended December 31, 2017, are summarized as follows:
Pam
Sun
Sales
$1,200,000
$600,000
Income from Sun
260,800
Bond interest income (Includes discount amortization)
91,000
(750,000)
(200,000)
Cost of sales
Operating expenses
Bond interest expense
(200,000)
(200,000)
(60,000)
$140,000
Net income
$ 601,800
Pam purchased its 80 percent interest in Sun at book value on January 1, 2016, when
Sun's assets and liabilities were equal to their fair values.
On January 1, 2017, Pam paid $783,000 to purchase all of Sun's $1,000,000, 6 percent
outstanding bonds. The bonds were issued at par on January 1, 2015, pay interest semiannually
on June 30 and December 31, and mature on December 31, 2023.
Required: Prepare a consolidated income statement for Pam Corporation and Subsidiary
for the year ended December 31, 2017.
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