About: Preferred stock held by parent with dividend arrearage

Question:

On January 1, 2014, Pop AG purchased 750 shares of outstanding preferred stock from Ron AG, its 90 percent-owned affiliate, at $100 per share. The stockholders equity of Pop AG at the time was as follows:

Common stockholders equity $415,000 Preferred stockholders equity (1,000 shares, 104 call price $114,000 per share, $10 per share dividend arrearage)

Ron reported net income of $50,000 and passed dividend during 2014.

R E Q U I R E D : Prepare the necessary entries needed for Pop AG to account for the transactions above!