Pen Corporation acquired a 90 percent interest in Soo Corporation in a taxable transaction on January 1, 2011, for $900,000, when Soo had $500,000 capital stock and $400,000 retained earnings. The $90,000 excess cost over book value is due to goodwill. Pen and Soo are an affiliated group for tax purposes.

During 2011, Pen sold land to Soo at a $20,000 profit. Soo still holds the land. Soo paid dividends of $50,000. A flat 34 percent tax rate applies to Pen and Soo. Income statements for Pen and Soo, and a consolidated income statement for Pen and Subsidiary, are summarized as follows:

REQUIRED: Reconstruct all the workpaper entries needed to consolidate the financial statements of Pen Corporation and Subsidiary for2011.

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Consolidated Pen Soo Sales Gain on sale of land Income from Soo Cost of sales $200,000 $1,000,000 $ 800,000 36,430 (400,000) (150,000) (85,000) (475,000) (180,000) (117,300) (75,000) (30,000) (32,300) Other expenses Income tax expense Noncontrolling interest share Net income (6,270) $ 221,430 $ 221,430 $ 62,700