Cupboard Fent C19 D E G Problem #2 (20 pts) On January 1, 2018, Pam Corp paid $200,000 cash for 40% of the voting common stock of Sun Company Book value and fair value information for Sun on this date is as follows: 1 2 3 Assets Book Value Fair Value 4 Cash 5 Accounts receivable $60,000 $60,000 120,000 120,000 6 Inventories (sold 100% in 2018) 80,000 60,000 7 Equipment-net (5-year remaining life) 340,000 500,000 8 Total assets $600,000 $740,000 9 10 Liabilities & Equities 11 Accounts payable $200,000 $200,000 12 Notes payable (due in 4 years) 120,000 100,000 13 Capital stock 200,000 14 Retained earnings 80,000 $600,000 15 Total liabilities and equity 16 Additional information: On July 1, 2018, Sun Company paid $20,000 cash dividends to common shareholders. Sun reported net income of $22,000 for 2018. Required (SHOW ALL YOUR WORK-Points will be deducted if no work shown): 1. Prepare a schedule to allocate the investment fair values/book value differentials relating to Pam's investment in Sun Include the following: a. (2 pts) Start by calculating total excess fair value (or cost) over book value acquired b. (5 pts) Then, prepare a schedule to allocate cost-book value differentials, including i Amounts assigned to identifiable net assets. ii. Remainder assigned appropriately 2. (7 pts) Calculate Pam's Income from Sun for 2018 (MUST show the amortization schedule including amounts assigned from part 1, amortization rates, and amorization expenses). 3. (3 pts) Calculate the balance of Pam's Investment in Sun account at December 31, 2018. 74. (3 pts) Prepare all the journal entries on the books of Pam Corp. during 2018 to account for the investment in Sun. sign Problem #1 Problem #2 Problem #3 eady