Par corporation acquired its 90 percent interest in sam corporation at its book value of 3,600,000 on January 1, 2011, when sam had capital stock of 3,000,000 and retained earnings of 1,000,000. The December 31, 2011 and 2012, inventories of Par included merchandise acquired from Sam of $300,000 and $400,000, respectivley. Sam realizes a gross profit of 40 precent on all merchandisee sold. During 2011 and 2012, sales by Sam to Par were $600,000 and $800,000, respectively. Summary adjusted trial balance for Par and Sam at December 31, 2012, follow (in thousands):

Par Sam

Cash $ 1,000 $200

Receivables-net 2,000 500

Inventories 2,400 1,000

Plant assets-net 2,500 4,800

Investment in Sam-90% 4,356 -

Cost sales 8,000 3,900

Other expenses 3,400 1,600

Dividends 1,000 500

24,656 12,500

Par Sam

Account payable 1,500 900

Other liabilities 600 600

Capital stock, $10 par 5,000 3,000

Retained earning 3,692 1,500

Sales 13,000 6,500

Income from Sam 864 -

24,656 12,500

Prepare a combined consolidated income and retained earninggs statement for Par Corporation and Subsidary for the year ended December 31, 2012.