General problems1. Peg Corporation owns a 70 percent interest in San Corporation, acquired...

General problems

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 $20,000 to Peg in part payment of a $40,000 account with Peg. Peg had not received the check when its books were closed on December 31. Peg Corporation had accounts receivable of $300,000 (including the $40,000 from San), and San had accounts receivable at $440,000 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.

Pirn Corporation purchased a 70 percent interest in Sar Corporation on January 1, 2011, for $28,000, when Sar’s stockholders’ equity consisted of $6,000 common stock, $20,000 additional paid-in capital, and $4,000 retained earnings. Income and dividend information for Sar is as follows:

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2. Pirn reported income of $24,000 for 2013. This does not include income from Sar. What is consolidated net income for 2013?

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3. What is Pirn’s Investment in Sar balance at December 31, 2013, under the equity method?