1. Peg Corporation owns a 70 percent interest in San Corporation, acquired several years ago at book value. On December 31, 2011, San mailed a check for $40,000 to Peg in part payment of an $80,000 account with Peg. Peg had not received the check when the books were closed on December 31. Peg Corporation had accounts receivable of $600,000 (including the $80,000 from San), and San had accounts receivable of $880,000 at year-end. In the consolidated balance sheet of Peg Corporation and Subsidiary at December 31, 2011, accounts receivable will be shown at what amount?
Use the following information in answering questions 2 and 3.
Pim Corporation purchased a 70 percent interest in Sar Corporation on January 1, 2011, for $56,000, when Sar's stockholders' equity consisted of $12,000 common stock, $40,000 additional paid-in capital, and $8,000 retained earnings. Income and dividend information for Sar is as follows:
2011 2012 2013
Net income (or loss) ......... $4,000 .......... $800 ......... $(2,000)
Dividends ...................... 1,600 ............ 400 ............. -
2. Pim reported income of $48,000 for 2013. This does not include income from Sar. What is consolidated net income for 2013?
3. What is Pim's Investment in Sar balance at December 31, 2013, under the equity method?