Advanced Accounting

Jul 1st, 2016
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Saint Leo University
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Advanced Accounting Week 2 Homework Assignment

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Saint Leo UniversityMay 18, 2015Assignment 2Instructor: RichterOn December 31, 2011, Pen Corporation purchased 80 percent of the stock of Sut Company at bookvalue. The data reported on their separate balance sheets immediately after the acquisition follow. AtDecember 31, 2011, Pen Corporation owes Sut $20,000 on accounts payable. (All amounts are inthousands.)REQUIRED1. 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 incomeof $680,000 and Sut Company reported net income of $360,000. (Separate incomes does not includeincome from the investment in Sut.)1Pen Corporation and SubsidiaryConsolidated Balance SheetAt December 31, 2011(In thousands)AssetsCash ($64 + $36)$ 100Accounts receivable ($90 + $68 - $10)Inventories ($286 + $112)398Equipment net ($760 + $350) 1,110148Total assets$1,756Liabilities and Stockholders EquityLiabilities:Accounts payable ($80 + $66 - $10)$ 136Stockholders equity:Common stock, $10 par 920Retained earnings600No controlling interest ($300 + $200) * 20%100Total liabilities and stockholders equity2$1,756Consolidated net income for 2012Pens separate income $680Add: Income from Sut $320Consolidated net income$1000Noncontrolling interest share (20% x $360,000) $ 36Controlling interest share (80%) $4841. Non-controlling interest share = 1

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