Pam Corporation acquired all the outstanding stock of Sun Corporation on April 1, 2016, for $15,000,000, when Sun's stockholders' equity consisted of $5,000,000 capital stock and $2,000,000 retained earnings. The price reflected a $500,000 undervaluation of Sun's inventory (sold in 2016) and a $3,500,000 undervaluation of Sun's buildings (remaining useful life seven years from April 1, 2016). During 2017, Sun sold land that cost $1,000,000 to Pam for $1,500,000. Pam resold the land for $2,200,000 during 2020. Pam sells inventory items to Sun on a regular basis, as follows (in thousands):

Sun sold equipment with a book value of $800,000 to Pam on January 3, 2020, for $1,600,000.
This equipment had a remaining useful life of four years at the time of sale.
Pam uses the equity method to account for its investment in Sun. The financial statements for
Pam and Sun are summarized as follows (in thousands):

REQUIRED:
Prepare a consolidation workpaper for Pam Corporation and Subsidiary for the year ended December 31, 2020

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Percentage Sales to Sun Percentage Unpaid by Sun at Year End Cost to Unsold by Sun at Year End 2016 $ 500 1,000 1,200 1,000 1,500 0% 2018 2019 720 Combined Income and Retained Earnings Statement for the Year Ended December 31, 2020 $26,000 $11,000 Gain on land Gain on equipment Income from Sun Cost of sales Depreciation expense Otherexpenses 1,380 (15,000) (3,700) (4,280) (5,000) (2,000) (2,800) Net income Add: Beginning retained earnings Deduct: Dividends 4.000 (1.000) 12,375 Retained earnings December 31 Balance Sheet at December 31, 2020 $1,170 $ 500 1,500 2,000 1,000 4.000 4.000 Accounts receivable-net Inventories 5,000 4,000 15,000 10,000 Buildings-net Equipment-net Investment in Sun Total assets $13.000 S 4,100 7,000 26,000 1,000 2,000 5,000 5,000 Accounts payable Other liabilities Capital stock Retained earnin Total equities gs