1. Sam Corporation has 100,000 outstanding shares of $10 par common stock and 5,000 outstanding shares of...

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1. Sam Corporation has 100,000 outstanding shares of $10 par common stock and 5,000 outstanding shares of $100 par, cumulative, 10 percent preferred stock. Sam’s net income for the year is $300,000, and its stockholders’ equity at year end is as follows (in thousands):
10% cumulative preferred stock, $100 par ..... $ 500
Common stock, $10 par ............ 1,000
Additional paid-in capital ............ 600
Retained earnings ............... 400
Total Stockholders’ Equity ........... $2,500
Par Corporation owns 60 percent of the outstanding common stock of Sam, acquired at a fair value equal to book value several years ago. Compute Par’s investment income for the year and the balance of its Investment in Sam account at the end of the year.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Advanced Accounting

ISBN: 9780132568968

11th Edition

Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith

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