Separate company financial statements for Pen Corporation and its subsidiary, Syn Company, at and for the year ended December 31, 2012, are summarized as follows (in thousands): Pen Syn
Combined Income and Retained Earnings Statements
for the Year Ended December 31
Sales
Income from Syn
Cost of sales
Expenses
Net income
Add: Retained earnings January 1
Deduct: Dividends
Retained earnings December 31 $400
18
(250)
(100.6)
67.4
177
(50)
$194.4 $100
—
(50)
(26)
24
34
(16)
$ 42
Balance Sheet at December 31
Cash
Accounts receivable—net
Dividends receivable from Syn
Note receivable from Pen
Inventory
Investment in Syn
Land
Buildings—net
Equipment—net
Total assets $ 18
80
7.2
—
95
219.6
65
170
130
$784.8 $ 15
20
—
5
10
—
30
80
50
$210
Accounts payable
Note payable to Syn
Dividends payable
Capital stock, $10 par
Retained earnings
Total equities $ 85.4
5
—
500
194.4
$784.8 $ 10
—
8
150
42
$210
ADDITIONAL INFORMATION
1. Pen Corporation acquired 13,500 shares of Syn Company stock for $15 per share on January 1, 2011,
when Syn’s stockholders’ equity consisted of $150,000 capital stock and $15,000 retained earnings.
2. Syn Company’s land was undervalued when Pen acquired its interest, and accordingly, $20,000 of the fair
value/book value differential was assigned to land. Any remaining differential is assigned to unrecorded
patents with a 10-year remaining life.
3. Syn Company owes Pen $5,000 on account, and Pen owes Syn $5,000 on a note payable.
R E Q U I R E D : Prepare consolidated workpapers for Pen Corporation and Subsidiary for the year ended
December 31, 2012.