Pan Corporation acquired 100 percent of Sal Corporation’s outstanding voting common stock on January 1, 2011, for $660,000 cash. Sal’s stockholders’ equity on this date consisted of $300,000 capital stock and $300,000 retained earnings. The difference between the fair value of Sal and the underlying equity acquired in Sal was allocated $30,000 to Sal’s undervalued inventory and the remainder to goodwill. The undervalued inventory items were sold by Sal during 2011. Pan made sales of $100,000 to Sal at a gross profit of $40,000 during 2011; during 2012, Pan made sales of $120,000 to Sal at a gross profit of $48,000. One-half the 2011 sales were inventoried by Sal at year-end 2011, and one-fourth the 2012 sales were inventoried by Sal at year-end 2012. Sal owed Pan $17,000 on account at December 31, 2012. The separate financial statements of Pan and Sal Corporations at and for the year ended December 31, 2012, are summarized as follows:

REQUIRED: Prepare workpapers to consolidate the financial statements of Pan Corporation and Subsidiary at and for the year ended December 31,2012.