Determine the amounts at which the following items will appear in the consolidated financial statements of Pam Corporation and Subsidiary for the year ended December 31, 2016.

7. Dividends declared

8. Gain on the retirement of bonds

Cost of goods sold

P7-5 (Based on AICPA] Computations (constructive retirement of subsidiary bonds) Selected amounts from the separate unconsolidated financial statements of Pam Corporation and its 90 percent-owned subsidiary. Sun Company, at December 31, 2016, are as follows (in thousands). Pam Sun Selected Income Statement Amounts S530 370 Sales $710 490 Cost of goods sold Gain on sale of cquipment Earnings from investment in subsidiary Interest expense Depreciation 21 63 16 25 20 Selected Balance Sheet Amounts Cash Inventories S 50 229 440 S15 150 360 Equipment Accumulated depreciation Investment in Sun (200) 189 (120) Investment in bonds 91 Bonds payable Common stock (200) (10) (40) (140) (100) (250) Additional puid-in capital Retained earnings (402) Selected Statement of Retained Earnings Amounts Beginning balance December 31, 201s Net income $272 212 $100 70 Dividends paid 80 30 ADDITIONAL INFORMATION 1. On January 2, 2016, Pam purchased 90 percent of Sun's 100,000 outstanding common stock for cash of SI53,000). On that date, Sun's steckholders' equity equaled $150,000 and the fair values of Sun's assets and liabilities equaled their carrying amounts. Pam correctly accounted for the combination as an acquisi- tion. The difference between fair value and book value was due to goodwill. 2. On September 4, 2016, Sun paid cash dividends of $30,000. 3. On December 31, 2016, Pam recorded its equity in Sun's earnings. 4. On January 3, 2016, Sun sold equipment with an original cost of $30,000 and a carrying value of $15,000 to Pam for S36,000. The equipment had a remaining life of three years and was depreciated using the straight-line method by both companies. 268 CATER 7 5. During 2016, Sun sold merchandise to Pam for $60.000, which included a profit of $20.000. At December 31, 2016, lalf uf this menclundise remained in Pam's iuventuny. 6. On December 31, 2016, Pam puid S91,000 to purchase half of the outstanding bonds issued by Sun. The bonds mature on December 31, 2022. and were originally issued at par. These bonds pay interest annually on December 31 of cach year, and the interest was paid to the prior investor immediately before Pam's purchase of the bonds.