In August 2016, Sun sold inventory items to Pam for $60,000 at a gross profit of $15,000. One third of these items remained in Pam's inventory at December 31, 2016.
On September 30, 2016, Pam sold an inventory item (equipment) to Sun for $50,000 at a gross profit to Pam of $10,000. When this equipment was placed in service by Sun, it had a five-year remaining useful life and no expected salvage value.
Sun's dividends were declared in equal amounts on June 15 and December 15, and its income was earned in relatively equal amounts throughout each quarter of the year. Pam applies the equity method, such that its net income is equal to the controlling share of consolidated net income. Financial statements for Pam and Sun are as follows (in thousands):
Prepare a consolidation workpaper for the year ended December 31, 2016.