On January 2, 2020, Paco Company purchased 100% of the common stock of Solo Company by issuing 40,000 shares of Paco's $10 par value common stock with a market price of $17.50 per share. Paco incurred cash expenses of $20,000 for registering and issuing common stock. The stockholders' equity section of the two companies' balance sheets on December 31, 2019 were:

Paco Solo

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

Other Contributed Capital 590,000 175,000

Retained Earnings 380,000 205,000

1. Prepare the journal entry on the books of Paco Company to record the purchase of the common stock of Solo Company and related expenses.

2. Prepare the elimination entry required for the preparation of a consolidated balance sheet workpaper on the date of acquisition.