Pep Corporation owns a 40 percent interest in Jay Company, a joint venture that is organized as an undivided interest. In its separate financial statements, Pep accounts for Jay under the equity method, but for reporting purposes, the proportionate consolidation method is used.

Separate financial statements of Pep and Jay at and for the year ended December 31, 2011, are summarized as follows (in thousands):

REQUIRED: Prepare a workpaper for a proportionate consolidation of the financial statements of Pep Corporation and Jay Company at and for the year ended December 31, 2011.

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Pep Corporation Jay Company Combined Income and Retained Earnings Statements for the Year Ended December 31, 2011 Sales $ 800 $300 Income from Jay Cost of sales Depreciation expense Other expenses Net income Beginning retained earnings Beginning venture equity 20 (400) (100) (120) 200 (150) (40) (60) 50 300 250 Dividends (100) $ 400 $300 Retained earnings/venture equity Balance Sheets at December 31, 2011 $ 50 $ 100 130 110 Cash Receivables-net 30 Inventories 40 Land 140 60 200 300 Buildings-net Equipment-net Investment in Jay 100 180 120 $1,100 $460 Total assets $ 120 $100 Accounts payable Other liabilities 80 60 Common stock, $10 par Retained earnings Venture equity Total equities 500 400 300 $1,100 $460