P 10-2

[Preferred stock] Consolidation entries—investments in preferred and common stock—

midyear purchases Pierre SA acquired 90 percent of Sousse SA’s voting common stock for $585,000 on January 1, 2014.

Sousse’s total stockholders’ equity in December 31, 2014, is as follows (in thousands):

$10 preferred stock, 1,000 share, cumulative, nonparticipating, $100 par, $106 callable price

$100 Common stock, $10 par 500 Other paid in capital 50 Retained earnings 150 Total stockholders’ equity $800 ADDITIONAL INFORMATION 1. Pierre purchased 60 percent of Sousse’s preferred stock for $55,000 in July 1, 2014.

2. Net income of Sousse during 2014 was $60,000 and no dividends were declared.

3. Assume net income and accrued dividend was proportionate throughout the year.

REQuIRED: Prepare all necessary workpaper entries.