Reden Corporation purchased 45 percent of the common stock of Montgomery Company on January 1, 20X9, at underlying book value of \(\$ 288,000\). The balance sheet of Montgomery Company contained the following stockholders' equity balances:

Montgomery's preferred stock is cumulative and pays a 10 percent annual dividend. Montgomery Company reported net income of \(\$ 95,000\) for \(20 \times 9\) and paid a total dividend of \(\$ 40,000\).
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Give the journal entries recorded by Reden Corporation for \(20 \mathrm{X} 9\) related to its investment in Montgomery Company common stock.

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Preferred Stock ($5 par value, 50.000 shares issued and outstanding) Common Stock ($1 par value, 150,000 shares issued and outstanding) Additional Paid-In Capital $250,000 150,000 180,000 Retained Earnings Total Stockholders' Equity 310,000 $890,000