Peter paid cash of $2,000,000 and issued 50,000 shares of its own $5 par value stock with a market value of $10 for 30% interest in Sol Companys outstanding voting stock on January 1, 2013. The book and fair values including amortization data are available as follows for Sol Company (in thousands).

Book Value Fair Value

Cash $3500 $3500

Receivables (net) 4000 4000

Inventory 600 800

Other current Assets 900 780

Land

Equipment (net) (10 yrs.) 1000 1600

Total Assets $10,000 $10,680

Accounts Payable $3600 $3600

Note Payable 4000 3800

Common Stock 2000

Retained Earnings 400

Total L & SE $10,000

Sol Company Realized $800,000 of net income and distributed dividends of $600,000 for the year of 2013.

Required:

1) Show the journal entry to record the investment and prepare an allocation schedule for investment fair/book differences for Peters investment in Sol Company.

2) What is Peters income from Sol? (Show calculations)

3) What is the balance in Peters investment account at the end of 2013? (show calculations)

4) Journalize the entries to account for Peters investment in Sol Company during 2013.