29 Jun Retained earnings………….
Question
1. The separate condensed balance sheets and income statements of Par Corp. and its wholly owned subsidiary, Sub Corp., are as follows:
Balance Sheets
December 31, 20X8
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………………………………..
Assets
Par
Sub
Current
$
149,000
$ 50,000
Cash……………………………….
Accounts receivable ( net)……………
190,000
60,000
Inventories…………………………
90,000
40,000
……………….Totalcurrentassets
$
429,000
$150,000
Property, plant, and equipment (net)…….
$
361,000
$200,000
Investment in Sub (equity method)……….
320,000
—
………………………Totalassets
$1,110,000
$350,000
==========
========
Liabilities and Stockholders’ Equity
Current liabilities
$
100,000
$ 70,000
Accounts payable…………………….
Accrued liabilities………………….
30,000
20,000
…………..Totalcurrentliabilities
$
130,000
$ 90,000
==========
========
Stockholders’ equity
$
220,000
$ 30,000
Common stock ($10 par)……………….
Additional paid-in capital……………
140,000
100,000
Retained earnings……………………
620,000
130,000
………….Totalstockholders’equity
$
980,000
$260,000
Total liabilities and stockholders’
$1,100,000
$350,000
equity………………………….
==========
========
Income Statement
For the Year Ended December 31, 20X8
Sales
Par
Sub
$1,000,000
$300,000
Cost of goods sold…………………….
770,000
200,000
………………………….Grossmargin
$
230,000
$100,000
Other operating expenses……………….
130,000
50,000
………………………Operatingincome
$
100,000
$ 50,000
Equity in earnings of Sub………………
30,000
—
……………………Incomebeforetaxes
$
130,000
$ 50,000
Provision for income taxes……………..
40,000
20,000
………………………….Netincome
$
90,000
$ 30,000
==========
========
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