Pam Corporation acquired a 90 percent interest in Sun Corporation on January 1, 2016, for $2,700,000, at which time Sun's capital stock and retained earnings were $1,500,000 and $900,000, respectively. The fair value cost/book value differential is due to a patent with a 10-year amortization period. Financial statements for Pam and Sun for 2017 are as follows (in thousands):

ADDITIONAL INFORMATION
1. Pam sold inventory to Sun for $600,000 during 2016 and $720,000 during 2017; Sun's inventories at December 31, 2016 and 2017, included unrealized profits of $100,000 and $120,000, respectively.
2. On July 1, 2016, Pam sold machinery with a book value of $280,000 to Sun for $350,000. The machinery had a useful life of 3.5 years at the time of intercompany sale, and straight-line depreciation is used.
3. During 2017, Pam sold land with a book value of $150,000 to Sun for $200,000.
4. Pam's accounts receivable on December 31, 2017, includes $100,000 due from Sun.
5. Pam uses the equity method for its 90 percent interest in Sun.
REQUIRED:
Prepare a consolidation workpaper for Pam and Subsidiary for the year ended December 31, 2017.

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Pam Combined Income and Retained Earnings Statement for the Year Ended December 31, 2017 Sales Income from Sun Gain on land Cost of sales Operating expenses 4,500 $1,900 (2,000) 1,130) (1,000) (400) Net income Add: Retained earnings January1 Less: Dividends 2,000 1,200 Retained earnings, December 31 Balance Sheet at December 31, 2017 Cash Accounts receivable Dividends receivable Inventories Land Buildings-net Machinery-net Investment in Sun $1,364 1,800 180 600 1,000 2,800 3,300 2,922 $ 140 1,000 360 300 800 1,400 Accounts payable Dividends payable Other liabilities Capital stock Retained earnings $ 2,000 300 1,400 8,000 266 $ 500 200 300 1,500 1,500