PROBLEMS P 3-1 Prepare a consolidated balance sheet at acquisition and compute consolidated net income one year later On December 31, 2011, Pen Corporation purchased 80 percent of the stock of Sut Company at book value. The data reported on their separate balance sheets immediately after the acquisition follow. At December 31, 2011, Pen Corporation owes Sut $20,000 on accounts payable. (All amounts are in thousands.) Pen Sut $ Assets Cash Accounts receivable Inventories Investment in Sut Equipment-net 72 136 224 $ 128 180 572 800 1.520 $3,200 700 $1.132 Liabilities and Stockholders' Equity Accounts payable Common stock, $20 par Retained earnings $ 160 1.840 1.200 $3,200 $ 132 600 400 $1.132 REQUIRED 1. Prepare a consolidated balance sheet for Pen Corporation and Subsidiary at December 31, 2011. 2. Compute consolidated net income for 2012 assuming that Pen Corporation reported separate income of $680,000 and Sut Company reported net income of $360,000. (Separate incomes do not include income from the investment in Sut.) NAME HERE PEN CORPORATION AND SUBSIDIARY P 3-1 CONSOLIDATED BALANCE SHEET WORKING PAPER FOR YEAR ENDED DECEMBER 31, 2011 Adjustments & Eliminations (in thousands) Pen Sut Debits Credits Cash 128 72 Accounts receivable 180 136 Inventories 572 224 Equipment-net 800 Investment in Sut 1,520 700 Total assets 3,200 1,132 Accounts payable 160 132 Common stock 1,840 Retained earnings 1,200 400 Total equities 3,200 1,132 Noncontrolling interest Consolidated Balance Sheet 200 316 796 800 2,220 4,332 292 2,440 1,600 600 0 4,332 0 Show transcribed image text