On January 1, 2013, Dmetri Ltd acquired all the issued shares of Island Ltd. At this date the equity of Island consisted of:

Share capital—100,000 shares issued at $5 per share $500,000

Asset revaluation surplus—Cumulative 100,000 other comprehensive income

Retained earnings 250,000

In exchange for these shares, Dmetri agreed to pay the former shareholders of Island two shares in Dmetri, with a fair value of $4 per share, plus $1.50 cash for each share held in Island. The costs of issuing the shares were $800.

Required

Prepare the journal entries in the records of Dmetri to record these events.