Pal Corporation acquired 70 percent of the outstanding voting stock of Sal Corporation for $91,000 cash on January I, 201 I, when Sal's stockholders\" equity was $130,000. All the assets and liabilities of Sal were stated at fair values (equal to book values) when Pal acquired its '10 percent interest. Financial statements of the two corporations at and for the year ended December 31, 2011, are summarized as follows (in thousands): Pal Sal Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales $620 $200 Income from Sal 21 Cost of Goods Sold {400} (130} Operating expenses E) E} Net income 37' 30 Add: Retained earnings January 1 130 22 Deduct: Dividends {60) (20} Retained earnings December 31 E E Bainm'e Sheet of December 3.1 Cash 35 91 $ 30 Receivablesnet l 20 60 Inventories 4B 40 Plant and equipmentnet 240 T0 Investment in Sal 93 Total assets W 15200 Accounts payable $ 60 $ 36 Other liabilities 40 24 Capital stock. $10 par 31]] 100 Other paidin capital 40 3 Retained earnings 15? 32 Total equities W 55200 H E0 U | H E D '1. Prepare consolidation workpapers for Pal Corporation and Subsidiary for 2011. 2. Prepare a consolidated income statement and a consolidated balance sheet for Pal Corporation and Subsidiary