Consolidation workpapers (upstream sales, noncontrolling interest) Pol Corporation purchased a 90 percent interest in San Corporation on December 31, 2010, for $2,700,000 cash, when San had capital stock of $2,000,000 and retained earnings of $500,000. All San's assets and liabilities were recorded at their fair values when Pol acquired its interest. The excess of fair value over book value is due to previously unrecorded patents and is being amortized over a 10-year period. The Pol-San affiliation is a vertically integrated merchandising operation, with San selling all of its output to Pol Corporation at 140 percent of its cost. Pol sells the merchandise acquired from San at 150 percent of its purchase price from San. All of Pol's December 31, 2011, and December 31, 2012, inven- tories of $280,000 and $420,000, respectively, were acquired from San. San's December 31, 2011, and December 31, 2012, inventories were $800,000 each. Pol's accounts payable at December 31, 2012, includes $100,000 owed to San from 2012 purchases. Comparative financial statements for Pol Corporation and San Corporation at and for the year ended December 31, 2012, are as follows (in thousands): Pol San Combined Income and Retained Earnings Statement for the Year Ended December 31, 2012 Sales $8,190 $5,600 Income from San 819 Cost of sales (5,460) (4,000) Other expenses (1,544) (600) Net income 2,005 1,000 Add: Beginning retained earnings 1,200 700 Deduct: Dividends (1,000) (500) Retained earnings December 31, 2012 $2,205 $1,200 Balance Sheet at December 31, 2012 Cash Inventory $753 $500 420 800 Other current assets 600 200 Plant assets-net Investment in San Total assets Current liabilities Capital stock 3,000 3,000 3.132 $7,905 $4,500 $1,700 $1,300 4,000 2,000 Retained earnings Total equities 2.205 1.200 $7,905 $4,500 REQUIRED: Prepare consolidation workpapers for Pol Corporation and Subsidiary for the year ended December 31, 2012.