Sam Corporation has 100,000 outstanding shares of $10 par common stock and 5,000 outstanding shares of $100 par, cumulative 10% preferred stock. Sam's net income for the year is $300,000, and its stockholders' equity at year end is as follows:
Total Stockholders' Equity
$5000 10% cumulative preferred stock, $100 par
100,000 Common stock, $10 par
$ 600,000 Additional paid-in capital.
$ 400,000 Retained earnings
Par Corporation owns 60 % of the outstanding common stock of Sam, acquired at a fair value equal to book value several years ago. Compute Par's investment income for the year and the balance of its. Investment in Sam account at the end of the year.
Suganya from India
Dear Suganya, Answer is very simple, you just multiply 60% with $ 10,00,000 and it will be $ 6,00,000