Pam Corporation acquired 80 percent of Sun Corporation's common stock on January 1, 2016, for $840,000 cash. The stockholders' equity of Sun at this time consisted of $600,000 capital stock and $200,000 retained earnings. The difference between the fair value of Sun and the underlying equity acquired in Sun was due to a $50,000 undervaluation of Sun's inventory, a $100,000 undervaluation of Sun's equipment, and unrecorded patents with a 20-year remaining life.

The undervalued inventory was sold by Sun during 2016, and the undervalued equipment had a remaining useful life of five years. Straight-line depreciation is used.

Sun owed Pam $16,000 on accounts payable at December 31, 2016.

The separate financial statements of Pam and Sun Corporations at and for the year ended December 31, 2016, are as follows (in thousands):

Required:
Prepare consolidation work-papers for Pam Corporation and Subsidiary at and for the year ended December 31, 2016?

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Pam Sun Combined Income and Retained Earnings Statements for the Year Ended December 3I Sales Income from Sun Cost of sales Depreciation expense Other expenses $ 800 440 (320) (160) (102) (160) (80) (40) Net income Add: Retained earnings January1 Deduct: Dividends 300 (160) 200 (80) 280 Retained earnings December 31 Balance Sheet at December 31 Cash Trade receivables-net Dividends receivable Inventories $ 118 112 32 160 60 260 800 $ 120 160 120 120 280 400 Buildings-net Equipment-net Investment in Sun Total assets $2,386 $1,200 Accounts payable Dividends payable Other liabilities Capital stock, $10 par Retained earnings S 160 400 200 1,200 $200 40 80 600 280 $1,200 Total equities $2,386