PROBLEMS P 5-1 Consolidated Income and retained earnings (upstream sales, noncontrolling Interest Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3.60001 on January 1, 2016, when Sun had capital stock of $3,000,000 and retained earnings of $1.000.000 The December 31, 2016 and 2017, inventories of Pam included merchandise acquired from Sun of $300,000 and $400,000, respectively. Sun realizes a gross profit of 40 percent on all merchandise sold. During 2016 and 2017, sales by Sun to Pam were $600,000 and $800,000, respectively. Summary adjusted trial balances for Pam and Sun at December 31, 2017, follow in thousands): Pam Sun $ Cash Receivables-net Inventories Plant assets-net Investment in Sun-90% Cost of sales Other expenses Dividends 200 500 1,000 4,800 $ 1,000 2,000 2,400 2,500 4,356 8,000 3,400 1,000 $24,656 3,900 1,600 500 $ 12,500 $ Accounts payable Other liabilities Capital stock, $10 par Retained earnings Sales Income from Sun Pam $ 1,500 600 5,000 3,692 13,000 864 Sun 900 600 3,000 1,500 6.500 - $24,656 $12,500 REQUIRED: Prepare a combined consolidated income and retained earnings statement for Pam Corporatiom and Subsidiary for the year ended December 31, 2017