Problem 4 Comparative income statement for Prim Corporation and its 100%-owned subsidiary, Saddie Corporation, for the year ended December 31, 2011, are summarized as follows: Prim Saddie Sales $500,000 $1,000,000 226,000 Income from Saddie 22,000 Bond interest income (includes discount amortization) Cost of sales (670,000) (150,000) (50,000) (200,000) (100,000) Operating expenses Bond interest expense Page 3 of 4 Net income $365,000 $222,000 Prim purchased its interest in Saddie at book value on January 1, 2003. On January 1, 2004, Prim sold $500,000 par of 10%, 10-year bonds to the public at par value, and on January 1, 2011, Saddie purchased $200,000 par of the bonds at 97. Both companies use straight-line amortization. There are no other intercompany transactions between the affiliated companies. Required: Prepare a consolidated income statement for Prim Corporation and Subsidiary for the year ended December 31, 2011