E 7-7 Parent purchases subsidiary bonds Comparative balance sheets of Pam and Sun Corporations at December 31, 2016, follow:

Pam Sun Assets Accounts receivable—net $ 2,048,600 $ 600,000 Interest receivable 20,000 —

Inventories 6,000,000 1,000,000 Other current assets 197,000 400,000 Plant assets—net 7,680,000 5,000,000 Investment in Sun stock 3,661,600 —

Investment in Sun bonds 392,800 —

Total assets $20,000,000 $7,000,000 Liabilities and Stockholders’ Equity Accounts payable $ 800,000 $ 278,000 Interest payable — 100,000 10% bonds payable — 2,072,000 Capital stock 16,000,000 4,000,000 Retained earnings 3,200,000 550,000 Total equities $20,000,000 $7,000,000