Pam Corporation owned a 90 percent interest in Sun Corporation, and during 2015 the following changes occurred in Sun's equity and Pam's investment in Sun (in thousands):

During 2016, Sun's net income was $280,000, and it declared $40,000 dividends each quarter of the year.
Pam reduced its interest in Sun to 80 percent on July 1, 2016, by selling Sun shares for $120,000.
REQUIRED
1. Prepare the journal entry on Pam's books to record the sale of Sun shares as of the actual date of sale.
2. Prepare the journal entry on Pam's books to record the sale of Sun shares as of January 1, 2016.
3. Prepare a schedule to reconcile the answers to parts 1 and 2.

Transcribed Image Text:

Sun's Stockholders' Investment in Sun(90%) Equity $1,000 250 (150) $1,100 Goodwill Balance, January 1, 2015 Income-2015 Dividends-2015 $49.5 $ 949.5 225 (135) $1,039.5 Balance, December 31, 201:5 $49.5