Equity Method, Consolidation, and Minority Interest On January 2, 20X6, Jordan Shoe Company purchased 40% of Sports Clothing Company (SCC) for $2.0 million cash. Before the acquisition, Jordan had assets of $10 million and stockholders' equity of $8 million. SCC had stockholders' equity of $5 million and liabilities of $1 million, and the fair val- ues of its assets and liabilities were equal to their book values. SCC reported 20X6 net income of $400,000 and declared and paid dividends of $100,000. Assume that Jordan and SCC had no sales to one another. Separate income statements for Jordan and SCC were as follows:

Sales Expenses Operating income Jordan Shoe Company $12,500,000 11,100,000 $ 1,400,000 Sports Clothing Company $4,400,000 4,000,000 $ 400,000 1. Prepare the journal entries for Jordan Shoe

(a) to record the acquisition of SCC and

(b) to record its share of SCC net income and dividends for 20X6. 2. Prepare Jordan Shoe's income statement for 20X6 and calculate the balance in its investments in SCC as of December 31, 20X6. 3. Suppose Jordan had purchased 80% of SCC for $4 million. Using the balance sheet equation for- mat, prepare a tabulation of the consolidated balance sheet immediately after acquisition. Prepare the journal entries for both Jordan and SCC to record the acquisition, Omit explanations. 4. Prepare a consolidated income statement for 20X6, using the facts of requirement 3 above.