Pal Corporation acquired a 75 percent interest in Sun Corporation on January 1, 2011, for $720,000 in cash. Financial statements of Pal and Sun Corporations for 2011 are as follows (in thousands):

REQUIRED
Prepare consolidation workpapers for Pal Corporation and Subsidiary for the year ended December 31, 2011. Only the information provided in the financial statements is available; accordingly, your solution will require some standard assumptions.

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Pal Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales Income from Sun Cost of sales Other expenses Net income Add: Retained earnings January1 Deduct: Dividends S1,600 (200) 104) (1,000) 284 720 200) 136 64) 168 Retained earnings December 31 Balance Sheet at December 31 Cash Accounts receivablenet Dividends receivable from Sun Inventories Note receivable from Pal S 236 $ 60 80 380 260 520 120 320 Buildings-net Equipment net Investment in Sun 744 Total assets Accounts payable Note payable to Sun Dividends payable $ 40 32 168 S 340 Capital stock, $10 par Retained earnings Total equities $3,164