Use the following information to answer Questions 14 and 15.

Parkes Company acquired 90% of Stanton Company's common stock for $780,000 and 40% of its preferred stock for $180,000. On January 1, 2010, the date of acquisition, the companies reported the following account balances:

Parkes Company Stanton Company

Preferred stock, $100 par value $ 500,000 $ 360,000

Common stock, $10 par value 1,200,000 600,000

Other contributed capital 190,000 140,000

Retained earnings 210,000 110,000

Total stockholders' equity $2,100,000 $1,200,000

The preferred stock is 10%, cumulative, nonparticipating, and has a liquidation value equal to 104% of par value. Dividends were not paid during 2009. During 2010, Stanton Company reported net income of $120,000 and declared and paid cash dividends in the amount of $70,000.

14. The difference between the implied value of the preferred stock and its book value is

a. $40,000.

b. $39,600.

c. $34,400.

d. $26,000.

e. 15,840.