Hi Everyone! Can someone or some two of you explain the entries for this Exercise?

On January 1, 2011, Polo Company purchased 100% of the common stock of Save Company by issuing 40,000 shares of its (Polos) $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 com-mon stock. The stockholders equity section of the two companies balance sheets on December 31, 2010, were:

Polo Save

Common stock, $10 par value $350,000 $320,000

Other contributed capital 590,000 175,000

Retained earnings 380,000 205,000

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.