On January 1, 2024, Polo Company purchased 100% of the common stock of Save Company by issuing 40,000 shares of its (Polo’s) $10 par value common stock with a market price of $17.50 per share. Polo incurred cash expenses of $20,000 for registering and issuing the common stock. The stockholders’ equity section of the two companies’ balance sheets on December 31, 2023, were:

Required:
A. Prepare the journal entry on the books of Polo Company to record the purchase of the common stock of Save Company and related expenses.
B. Prepare the elimination entry required for the preparation of a consolidated balance sheet workpaper on the date of acquisition.

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Common stock, $10 par value Other contributed capital Retained earnings Polo $350,000 590,000 380,000 Save $320,000 175,000 205,000