Pam Corporation purchased a 90 percent interest in Sun Corporation on December 31, 2015, for $2,700,000 cash, when Sun had capital stock of $2,000,000 and retained earnings of $500,000. All Sun's assets and liabilities were recorded at fair values when Pam acquired its interest. The excess of fair value over book value is due to previously unrecorded patents and is being amortized over a 10-year period. The Pam-Sun affiliation is a vertically integrated merchandising operation, with Sun selling all of its output to Pam Corporation at 140 percent of its cost. Pam sells the merchandise acquired from Sun at 150 percent of its purchase price from Sun. All of Pam's December 31, 2016, and December 31, 2017, inventories of $280,000 and $420,000, respectively, were acquired from Sun. Sun's December 31, 2016, and December 31, 2017, inventories were $800,000 each. Pam's accounts payable at December 31, 2017, includes $100,000 owed to Sun from 2017 purchases.

Comparative financial statements for Pam and Sun Corporations at and for the year ended December 31, 2017, are as follows (in thousands):

REQUIRED:
Prepare consolidation workpapers for Pam Corporation and Subsidiary for the year ended December 31, 2017.

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Pam Sun Combined Income and Retained Earnings Statement for the Year Ended December 31, 2017 Sales Income from Sun Cost of sales Other expenses $8,190 819 (5,460) (1,544) 2,005 1,200 (1.000) $5,600 (4,000) (600) 1,000 700 (500) $1.200 Net income Add: Beginning retained earnings Deduct: Dividends Retained earnings December 31, 2017 Balance Sheet at December 31, 2017 Cash 753 420 600 3,000 3,132 $7,905 $1,700 4.000 2,205 $7,905 $ 500 800 200 3,000 Other current asets Plant assets-net Investment in Sun Total assets $4.500 $1,300 2,000 1,200 $4,500 Current liabilities Capital stock Retained eanings Total equities