Par Corporation acquired a 90 percent interest in Sag Corporation's outstanding voting common stock on January 1, 2011, for $630,000 cash. The stockholders' equity of Sag on this date consisted of $500,000 capital stock and $200,000 retained earnings. The financial statements of Par and Sag at and for the year ended December 31, 2011, are summarized as follows (in thousands):

During 2011, Par made sales of $50,000 to Sag at a gross profit of $15,000. One-third of these sales were inventoried by Sag at year-end. Sag owed Par $10,000 on open account at December 31, 2011. Sag sold land that cost $20,000 to Par for $30,000 on July 1, 2011. Par still owns the land. On January 1, 2011, Par sold equipment with a book value of $20,000 and a remaining useful life of four years to Sag for $40,000. Sag uses straight-line depreciation and assumes no salvage value on this equipment.REQUIRED: Prepare a consolidation workpaper for Par and Subsidiary for the year ended December 31,2011.

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Par Sag Combined Income and Retained Earnings Statement for the Year Ended December 31, 2011 Sales $ 700 $ 500 Income from Sag Gain on land 70 10 Gain on equipment Cost of sales 20 (300) (90) (300) (35) (65) Depreciation expense Other expenses Net income Beginning retained earnings Dividends Retained earnings December 31 (200) 200 600 110 200 (100) $ 700 (50) $ 260 Balance Sheet at December 31, 2011 $ 35 90 $ 30 Cash Accounts receivable-net 110 Inventories Other current items Land 100 80 40 70 50 200 70 150 Buildings-net Equipment-net Investment in Sag 500 400 655 S1.700 S 160 $ 880 $ 50 70 500 Accounts payable Other liabilities Capital stock, $10 par Retained earnings 340 500 700 S1,700 260 $ 880