E 8-12 Journal entries when subsidiary issues additional shares directly to parent Pam Corporation’s Investment in Sun Company account had a balance of $475,000 at December 31, 2016. This balance consisted of goodwill of $35,000 and 80 percent of Sun’s $550,000 stockholders’ equity.

On January 2, 2017, Sun increased its outstanding shares from 10,000 to 12,000 shares by selling 2,000 additional shares directly to Pam at $80 per share. Sun’s net income for 2017 was $90,000, and in December 2017 it paid $60,000 dividends.

REQuIRED: Prepare all journal entries other than closing entries to account for Pam’s investment in Sun during 2017. Any difference between fair value and book value is goodwill.