P 10-2 [Preferred stock] Consolidation entriesinvestments in preferred and common stock midyear purchases

Question:

Pierre SA acquired 90 percent of Sousse SAs voting common stock for $585,000 on January 1, 2014. Sousses total stockholders equity in December 31, 2014, is as follows (in thousands):

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

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 Sousses 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.

R E Q U I R E D : Prepare all necessary workpaper entries.