Pam Corporation purchased 40 percent of the voting stock of Sun Corporation on July 1, 2016, for

Question:

Pam purchased 40 percent of the voting stock of Sun on July 1, 2016, for $600,000. On that date, Sun's stockholders' equity consisted of capital stock of $1,000,000, retained earnings of $300,000, and current earnings (just half of 2016) of $100,000. Income is earned proportionately throughout each year.
The Investment in Sun account of Pam and the retained earnings account of Sun for 2016 through 2019 are summarized as follows (in thousands):

Pam Corporation purchased 40 percent of the voting stock of

Required
1. Determine the correct amount of the investment in Sun that should appear in Pam's December 31, 2019, balance sheet. Assume any difference between investment cost and book value acquired is due to goodwill.
2. Prepare any journal entry (entries) on Pam's books to bring the Investment in Sun account up to date on December 31, 2019, assuming that the books have not been closed at year-end 2019?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...