Pam Corporation acquired an 85 percent interest in Sun Corporation on August 1, 2016, for $522,750, equal to 85 percent of the underlying equity of Sun on that date.

In August 2016, Sun sold inventory items to Pam for $60,000 at a gross profit of $15,000. One third of these items remained in Pam's inventory at December 31, 2016.

On September 30, 2016, Pam sold an inventory item (equipment) to Sun for $50,000 at a gross profit to Pam of $10,000. When this equipment was placed in service by Sun, it had a five-year remaining useful life and no expected salvage value.

Sun's dividends were declared in equal amounts on June 15 and December 15, and its income was earned in relatively equal amounts throughout each quarter of the year. Pam applies the equity method, such that its net income is equal to the controlling share of consolidated net income. Financial statements for Pam and Sun are as follows (in thousands):

REQUIRED:
Prepare a consolidation workpaper for the year ended December 31, 2016.

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Pam Sun Combined Income and Retained Earnings Statement for the Year Ended December 31, 2016 Sales Income from Sun Cost of sales Operating expenses S 910 $400 7.5 (500) (200) (250) (90) Net income Add: Beginning retained earnings Deduct: Dividends 192.5 100 (40) $120 100) Retained earnings December 31 $ 310 Balance Sheet at December 31, 2016 Cash Dividends receiv Accounts receivable-net Inventories Plant assets-net Investment in Sun-85% S 33.75 $10 17 120 300 880 able 70 150 500 513.25 $1,864 S 154 Total assets Accounts pavable Dividends payable Retained earnings Total equities $730 $ 90 20 500 120 $730 1,400 310 $1,864 Capital stock