Sim Corporation, a 90 percent-owned subsidiary of Pal Corporation, was acquired on January 1, 2011, at a price of $45,000 in excess of underlying book value. The excess was due to goodwill. Separate financial statements for Pal and Sim for 2012 follow (amounts in thousands):

ADDITIONAL INFORMATION1. Pal sold inventory items to Sim during 2011 and 2012 as follows (in thousands):

2. Pal sold land that cost $7,000 to Sim for $10,000 during 2011. The land is still owned by Sim.3. In January 2012, Pal sold equipment with a book value of $21,000 to Sim for $30,000. The equipment is being depreciated by Sim over a three-year period using the straight-line method.4. On December 30, 2012, Sim remitted $2,000 to Pal for merchandise purchases. The remittance was not recorded by Pal until January 5, 2013, and it is not reflected in Pal's financial statements at December 31, 2012.REQUIRED: Prepare a consolidation workpaper for Pal Corporation and Subsidiary for the year ended December 31,2012.

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Pal Sim Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 Sales Income from Sim $100 $300 31 Gain on sale of equipment Cost of sales (140) (50) Operating expenses (60) 140 (10) 40 Net income Add: Beginning retained earnings Less: Dividends Retained earnings, December 31 157 (60) $237 70 (20) $ 90 Balance Sheet at December 31, 2012 Cash $ 17 $100 90 Accounts receivable Dividends receivable 50 9. Inventories Land 20 40 15 Buildings-net Equipment-net 135 50 60 165 Investment in Sim Total assets Accounts payable Dividends payable Other liabilities Capital stock Retained earnings Total equities 158 $717 $ 98 15 $200 10 67 300 20 50 237 90 $200 $717