Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3,600,000 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):

REQUIRED:
Prepare a combined consolidated income and retained earnings statement for Pam Corporation and Subsidiary for the year ended December 31, 2017.

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$ 1,000 200 Plant assets-net Investment in Sun-90% 8,000 Other expenses 1,000 Accounts payable Other liabilities Capital stock, $10 par Retained earnings 1 Income from Sun $24,656 $12,500