E2-14 Calculate income and investment account balance (investee has preferred stock)

Pam Corporation paid $290,000 for 40 percent of the outstanding common stock of Sun Corporation on January 2, 2017. During 2017, Sun paid dividends of $48,000 and reported net income of $108,000. A summary of Sun’s stockholders’

equity at December 31, 2016 and 2017 follows (in thousands):

December 31, 2016 2017 8% cumulative preferred stock, $100 par $100 $100 Common stock, $10 par 300 300 Premium on preferred stock 10 10 Other paid-in capital 90 90 Retained earnings 100 160 Total stockholders’ equity $600 $660 REQuIRED: Calculate Pam Corporation’s income from Sun for 2017 and its Investment in Sun account balance at December 31, 2017. Assume the book values of all of Sun’s assets and liabilities equal fair values.