Workpapers and financial statements in year of acquisition Pal Corporation acquired 70 percent of the outstanding voting stock of Sal Corporation for $182,000 cash on January 1,2011, when Sal's stockholders' equity was $260,000. All the assets and liabilities of Sal were stated at fair values (equal to book values) when Pal acquired its 70 percent interest Financial siatements 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 Jor the Year Ended December 31 Sales Income from Sal Cost of goods sold Operating expenses S1,240 42 $400 Net income Add: Retained earnings January t Deduct: Dividends 260 Retained canings December 31 Balance Sheet at December 31 S 182 240 96 S 60 120 80 140 Plant and Investment in $400 Total assets S 120 80 S 72 Accounts payable Other liabilities Capital stock, S10 par Other paid-in capital Retained earnings 80 16 Total equities REQUIRED 1. Prepare consolidation workpapers for Pal Corporation and Subsidiary for 201 2 Prepare a consolidated income siaiement and a consolidated balance sheet for Pal Corporation and Subsidiary