On January 1, 2015, Pruitt Company issued 25,500 shares of its common stock in exchange for 85% of the outstanding common stock of Shah Company. Pruitt's common stock had a fair value of $28 per share at that time (par value of $2 per share). Pruitt Company uses the cost method to account for its investment in Shah Company and files a consolidated income tax return. A schedule of the Shah Company assets acquired and liabilities assumed at book values (which are equal to their tax bases) and fair values follows.

Additional Information:
1. Pruitt's income tax rate is 35%.
2. Shah's beginning inventory was all sold during 2015.
3. Useful lives for depreciation and amortization purposes are:
Plant assets 10 years
Patents 8 years
Bond premium 10 years
4. Pruitt uses the straight-line method for all depreciation and amortization purposes.
Required:
A. Prepare the stock acquisition entry on Pruitt Company's books?
B. Prepare the eliminating entries for a consolidated statements work-paper on January 1, 2015, immediately after acquisition?

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Book Value Tax Basis $125,000 167,000 86,500 467,000 95,000 Item Fair Value s 125,000 195,000 120,000 567,000 200,000 $1,207,000 Excess Receivables (net) Inventory 28,000 33,500 100,000 105,000 $266,500 Plant assets (net) Patents Total $940,500 $89,500 300,000 120,000 164,000 267,000 $940,500 $ 89,500 360,000 Current liabilities Bonds payable Common stock Other contributed capital Retained earnings 60,000 Total