P8-2 Computations and entries (subsidiary issues additional shares to public)

Pop Corporation purchased 480,000 shares of Son Corporation’s common stock (an 80 percent interest)

for $10,600,000 on January 1, 2016. The $1,000,000 excess of investment fair value over book value acquired was attributed to goodwill.

On January 1, 2018, Son sold 200,000 previously unissued shares of common stock to the public for $30 per share. Son’s stockholders’ equity on January 1, 2016, when Pop acquired its interest, and on January 1, 2018, immediately before and after the issuance of additional shares, was as follows

(in thousands):

January 1, 2016 January 1, 2018 Before Issuance January 1, 2018 After Issuance Common stock, $10 par $ 6,000 $ 6,000 $ 8,000 Other paid-in capital 2,000 2,000 6,000 Retained earnings 4,000 5,000 5,000 Total $12,000 $13,000 $19,000 REQuIRED 1. Calculate the balance of Pop’s Investment in Son account on January 1, 2018, before the additional stock issuance.