F 5-8 Consolidated workpapers (dowmheam sales) Pop Corporation acquired 100 percent of Son Corporation's outstanding voting common stock on January 1, 2016, for $660,000 cash. Son's stockholders' equity on this date consisted of $300,000 capital stock and $300,000 retained earnings. The difference between the fair value of Son and the underlying equity acquired in Son was allocated $30,000 to Son's undervalued inventory and the remainder to good- will. The undervalued inventory items were sold by Son during 2016. Pop made sales of $100,000 to Son at a gross prot of $40,000 during 2016; during 201?, Pop made sales of $120,000 to Son at a gross prot of $48,000. One-half the 2016 sales were inventoried by Son at year-end 2016, and onefourth the 201':' sales were inventoried by Son at year-end 2011'. Son owed Pop $17,000 on account at December 31, 201?. The separate nancial statements of Pop and Son Corporations at and for the year ended December 31, 2017, are summarized as follows: Pop Son Combined Income and Retained Earnings Statement for the Year Ended December 31, 201? (in thousands JI Sales 35 800 $400 Income from Son 103 Cost of sales (400) {200) Depreciation expense (1 10) (40) Other expenses (1921 (60) Net income g W0- Beginning retained earnings 606 330 Less: Dividends {100) E) Retained earnings December 31, 2017 $ 712 30