P 6-3 Pal Corporation acquired a 90 percent interest in Sor Corporation on January 1, 2011, for $270,000, at which time Sor's capital stock and retained carnings were $150,000 and $90,000, respectively. The fair valae/book value differential is goodwill. Financial statements for Pal and Sor for 2012 are as follows (in thousands): Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 s 450 $190 Income from Sor Gain on land Cost of sales Operating expenses (100) Net income 182 Add: Retained earnings January Less: Dividends 120 Retained earnings, December 31 s 234 $150 Balance Sheet at December 31, 2012 Cash Accounts receivable Dividends receivable $ 133 180 18 60 100 280 330 $14 -100 36 30 80 140 Buildings--pet Investment in Sor Accounts payable Dividends payable Other liabilities Capital stock Retained earnings 30 140 800 20 30 150 ADDITIONAL INFORMATION 1. Pal sold inventory items to Sor for $60,000 during 2011 and $72,000 during 2012. Sor's inventories at December 31,2011 and 2012, included unrealized profits of $10,000 and $12,000, respectively. 2 On July 1,2011, Pal sold machinery with a book value of $28,000 to Sor for $35,000. The machinery had a useful life of 3.5 years at the time of sale, and straight-line depreciation is used. 3. During 2012, Pal sold land with a book value of $15,000 to Sor for $20,000 4 Pal's accounts receivable on December 31, 2012, includes $10,000 due from Sor 5. Pal uses the equity method for its 90% interest in Sor