Pam Corporation owns 90 percent of the voting stock of Sun Corporation and 25 percent of the voting stock of Ell Corporation.
The 90 percent interest in Sun was acquired for $36,000 cash on January 1, 2016, when Sun's stockholders' equity was $40,000 ($36,000 capital stock and $4,000 retained earnings).
Pam's 25 percent interest in Ell was purchased for $14,000 cash on July 1, 2016, when Ell's stockholders' equity was $48,000 ($30,000 capital stock, $12,000 retained earnings, and $6,000 current earnings-first half of 2016).
The difference between fair value and book value is due to unrecorded patents and is amortized over 10 years.
Adjusted trial balances of the three associated companies at December 31, 2016, are as follows:

Required
1. Reconstruct the journal entries that were made by Pam Corporation during 2016 to account for its investments in Sun and Ell Corporations.
2. Prepare an income statement, a retained earnings statement, and a balance sheet for Pam Corporation for December 31, 2016.
3. Prepare consolidation work-papers (trial balance format) for Pam and Subsidiaries for 2016.
4. Prepare consolidated financial statements other than the cash flows statement for Pam Corporation and Subsidiaries for the year ended December 31, 2016?

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20,000 40,000 22,000 Plant assets-net Investment in Sun-90 percent Investment in Ell-25% Dividends (paid in November) 6,000 10,000 $120,000 50,000 300,000 Retained earnings 200,000 60,000 Income from Sun $600.400