Accounts payable Other liabilities Capital stock Retained earnings Total equities P6-6 Workpaper (downstream and upstream sales) Pam Corporation acquired all the outstanding stock of Sun Corporation on April 1, 2016, for $15,000,000. when Sun's stockholders' equity consisted of $5,000,000 capital stock and $2,000,000 retained earnings. The price reflected a $500,000 undervaluation of Sun's inventory (sold in 2016) and a $3,500,000 under- valuation of Sun's buildings (remaining useful life seven years from April 1, 2016). During 2017, Sun sold land that cost $1,000,000 to Pam for $1,500,000. Pam resold the land for $2,200,000 during 2020. Pam sells inventory items to Sun on a regular basis, as follows (in thousands) Percentage Unsold by Sun at Year End Sales to Cost to Sun Pam 2016 $500 $300 0% 2017 1,000 600 30 2018 1,200 720 18 2019 1000 600 2000 1.500 900 Percentage Unpaid by Sun at Year End 0% 50 30 Sun sold equipment with a book value of $800,000 to Pam on January 3, 2020, for $1,600,000. This equipment had a remaining useful life of four years at the time of sale. Pam uses the equity method to account for its investment in Sun. The financial statements for Pam and Sun are summarized as follows (in thousands) Combined Income and Retained Earnings Statement for the Year Ended December 31, 2020 Sales Gain on land Gain on equipment Income from Sun Cost of sales Depreciation expense Other expenses Net income Pam Sun $26,000 700 $11,000 800 1380 (15,000) (5,000) (3.700) (2.000) (4.280) (2.500) 5.100 2000 Add: Beginning retained earnings 12.375 4,000 Deduct: Dividends (3,000) (1,000) Retained earnings December 31 $14.475 $5,000 Balance Sheet at December 31, 2020 Cash $1,170 $ 500 Accounts receivable-net 2,000 1500 Inventories 5.000 2,000 Land 4,000 1,000 Buildings-net 15.000 4.000 Equipment-net Investment in Sun Total assets 10,000 4,000 14,405 $51.575 $13,000 Pam Intercompany Profi Tamsons-Plant Assets 239 Sun $ 4,300 7,000 26,000 $ 1,000 2,000 5,000 14.475 5000 $51.375 $11,000 EQUIRED: Prepare a consolidation workpaper for Pam Corporation and Subsidiary for the year ended cember 31, 2020