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

Problem 1Q

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