Pettijohn Company has total stockholders equity of $2,000,000 consisting of $400,000 of $1 par value common stock, $400,000 of other contributed capital, and $1,200,000 of retained earnings. Pettijohn owns 80% of Spencer Company purchased at book value. Spencer has $800,000 of 5% cumulative preferred stock outstanding. Pettijohn acquired 40% of the preferred stock of Spencer for $200,000. After this transaction the balances in Pettijohns retained earnings and other contributed capital accounts are: (Show Work)

a. $1,200,000 and $400,000. b. $1,200,000 and $520,000. c. $1,320,000 and $400,000. d. $1,080,000 and $400,000.