P3-1 Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later

On December 31, 2016, Pam Corporation purchased 80 percent of the stock of Sun Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2016, Pam Corporation owes Sun $20,000 on accounts payable. (All amounts are in thousands.)

Pam Sun

Assets

Cash $128 $72

Accounts receivable 180 136

Inventories 572 224

Investment in Sun 800

Equipmentnet 1,520 700

$3,200 $1,132

Liabilities and Stockholders Equity

Accounts payable $160 $132

Common stock; $20 par 1,840 600

Retained earnings 1,200 400

$3,200 $1,132

REQUIRED

Prepare a consolidated balance sheet for Pam Corporation and Subsidiary at December 31, 2016.

2. Compute consolidated net income for 2017 assuming that Pam Corporation reported separate income of $680,000 and Sun Company reported net income of $360,000. (Separate incomes do not include income from the investment in Sun.)