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 $10,000 on accounts payable. (All amounts are in thousands.)
| Pen | Sut | |
| Assets | ||
| Cash | 64 | 36 |
| Accounts receivable-net | 90 | 68 |
| Inventories | 286 | 112 |
| Land | 400 | |
| Building-net | 760 | 350 |
| Net Income | 1600 | 566 |
| Liabilities and Stockholders’ Equity | ||
| Accounts payable | 80 | 66 |
| Common stock, $20 par | 920 | 300 |
| Retained earnings | 600 | 200 |
| 1600 | 566 |
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 $340,000 and Sut Company reported net income of $180,000. (Separate incomes does not include income from the investment in Sut.)
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