Comparative financial statements for Pen Corporation and its subsidiaries, Sir and Tip Corporations, for the year ended December 31, 2016, are as follows (in thousands):

	Pen	Sir	Tip
Income and Retained Earnings Statement for the Year Ended December 31
Sales	$500	$300	$100
Income from Sir	72
Income from Tip	12.5	10
Cost of sales	(240)	(150)	(60)
Other expenses	(160)	(70)	(15)
Net income	184.5	90	25
Add: Beginning retained earnings	115.5	160	45
Deduct: Dividends	(80)	(40)	(10)
Ending retained earnings	$220	$210	$ 60
Balance Sheet at December 31
Cash	$ 67	$ 36	$ 10
Accounts receivablenet	70	50	20
Inventories	110	75	35
Plant and equipmentnet	140	425	115
Investment in Sir (80%)	508
Investment in Tip (50%)	95
Investment in Tip (40%)		74
Total assets	$990	$660	$180
Accounts payable	$ 70	$ 40	$ 15
Other liabilities	100	10	5
Capital stock	600	400	100
Retained earnings	220	210	60
Total equities	$990	$660	$180

Additional Information

1. Pen acquired its 80 percent interest in Sir Corporation for $420,000 on January 2, 2014, when Sir had capital stock of $400,000 and retained earnings of $100,000. The excess fair value over book value acquired relates to equipment that had a remaining useful life of four years from January 1, 2014.

2. Pen acquired its 50 percent interest in Tip Corporation for $75,000 on July 1, 2014, when Tips equity consisted of $100,000 capital stock and $20,000 retained earnings. Sir acquired its 40 percent interest in Tip on December 31, 2015, for $68,000, when Tips capital stock was $100,000 and its retained earnings were $45,000. The difference between fair value and book value acquired is due to goodwill.

3. Although Pen and Sir use the equity method in accounting for their investments, they do not apply the method to intercompany profits or to differences between fair value and book value acquired.

4. At December 31, 2015, the inventory of Sir included inventory items acquired from Pen at a profit of $8,000. This merchandise was sold during 2016.

5. Tip sold merchandise that had cost $30,000 to Sir for $50,000 during 2016. All of this merchandise is held by Sir at December 31, 2016. Sir owes Tip $10,000 on this merchandise.

Required

Prepare a consolidation workpaper for the year ended December 31, 2016.