2) On January 1, 2018, Pamela Corporation made the following investments: - Acquired for cash, 70 percent of the outstanding common stock of Sally Corporation at $140 per share - Acquired for cash, 60 percent of the outstanding common stock of Sara Corporation at $80 per share The stockholders' equity of the two companies on January 1, 2018 were as follows: Sally Corporation Sara Corporation Common stock, par value $100 $100,000 Common stock, par value $40 $120,000 Capital in excess of par value 40,000 Retained earnings 40,000 80,000 - After these investments were made, Pamela was able to exercise control over the operations of both companies. An analysis of the retained earnings of each company for 2018 is as follows: Pamela Sally Sara Balance January 1 $480,000 $40,000 $80,000 Net income (loss) 209,200 72,000 (24,000) Cash dividends paid (80,000) (32,000) (18,000)