Pik Corporation acquired 80 percent of Sel Corporation's common stock on January 1, 2011, for $210,000 cash. The stockholders' equity of Sel at this time consisted of $150,000 capital stock and $50,000 retained earnings. The difference between the fair value of Sel and the underlying equity acquired in Sel was due to a $12,500 undervaluation of Sel's inventory, a $25,000 undervaluation of Sel's equipment, and goodwill. The undervalued inventory items were sold by Sel during 2011, and the undervalued equipment had a remaining useful life of five years. Straight-line depreciation is used. Sel owed Pik $4,000 on accounts payable at December 31, 2011. The separate financial statements of Pik and Sel Corporations at and for the year ended December 31, 2011, are as follows (in thousands):

REQUIRED: Prepare consolidation workpapers for Pik Corporation and Sel at and for the year ended December 31,2011.

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Pik Sel Combined Income and Retained Earnings Statements for the Year Ended December 31 Sales $200 $110 Income from Sel Cost of sales 18 (80) (40) (25.5) 72.5 (40) (20) (10) Depreciation expense Other expenses Net income Add: Retained earnings January 1 Deduct: Dividends 40 50 75 (40) (20) Retained earnings December 31 $107.5 $ 70 Balance Sheet at December 31 Cash Trade receivables–net $ 29.5 $ 30 28 40 Dividends receivable Inventories 30 30 40 Land 15 Buildings-net Equipment-net 65 200 70 100 Investment in Sel Total assets 212 $597.5 $300 Pik Sel $ 50 $ 40 Accounts payable Dividends payable Other liabilities Capital stock, $10 par Retained earnings Total equities 100 50 10 20 300 107.5 150 70 $597.5 S300