Pop Corporation acquired 80 percent of Son Corporation's preferred stock for $175,000 and 90 percent of Son's common stock for $630,000 on July 1, 2016. Son's stockholders' equity on December 31, 2016, was as follows (in thousands):
Stockholders' Equity
9% preferred stock, cumulative, nonparticipating, ...................... $200
$100 par, call price $105
Common stock, $10 par ....................................................... 500
Paid-in capital in excess of par ................................................ 40
Retained earnings ............................................................... 160
Total stockholders' equity ..................................................... $900
Son had net income of $24,000 in 2015 and $46,000 in 2016, but declared no dividends in either year. Assume that preferred dividends accrue ratably throughout each year and that Son Corporation's net assets were fairly valued on July 1, 2016.
REQUIRED:
1. Determine the account balances of Pop Corporation's investments in Son's preferred and common stocks at December 31, 2016, on the basis of a one-line consolidation.
2. Prepare workpaper entries to consolidate the balance sheets of Pop and Son at December 31, 2016.