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
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


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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