1.. Prepare the journal entry to record the consideration paid by JDE to acquire BMI.

2. Prepare the journal entry to record the consolidating elimination entry for the date of acquisition on December 31, 2010.

4. Prepare the equity method of accounting entries recorded by JDE during 2011.

5. Prepare the journal entry to record the consolidating elimination entry on December 31, 2011, one year subsequent to the date of acquisition

Prob mbination (40 points) On December 31, 2010, John Doe Enterprises (JDE) acquired a 55% interest in Bubba Manufacturing, Inc. (BMI). JDE paid for the transaction with $3 million cash and 500,000 shares of JDE common stock (par value $1.00 per share). At the time of the acquisition, BMI's book value was $16,970,000. On January 1, JDE stock had a market value of $14.90 per share and there was no control premium in this transaction. BMI had the following balances on January 1, 2011. Book Fair Value Value Land $1.700.000 $2.550.000 Buildings (seren-year remaining life) 2.700,000 3.+00,000 Equipment (five-year remaining life) 3.700.000 3.300.000 For internal reporting purposes, JDE employed the equity method to account for this investment. The following account balances are for the year ending December 31, 2011 for both companies. John Doe Bubba Enterprises Manufacturing Revenues $(298.000.000) $(103,750,000) Expenses 271.000.000 95.800.000 Equity in income of Bubba Manufacturing (7.361.500) Net income $(31.361,500 $(7.950,000) 0 Retained earnings, January 1. 2011 Net income (above) Dividends paid Retained earnings. December 31, 2011 $(2.500.000) (31.361.500) 5.000.000 $(28.861.500) $(100,000) (7.950.000) 3.000.000 $(5.050.000 $ 20.800.000 Current Assets Investment in Bubba Manufacturing Land Buildings Equipment (net) Total assets $ 30.500.000 13.161.500 1.500.000 5,600,000 3.100.000 $ 53.861.500 1.700.000 2.360.000 2.960.000 $ 27.820.000 $13.100.000) Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings. Dec 31, 2011 (above) Total liabilities and stockholders' equity (2.900.000) (19.000.000) (28.861 500) $(53.861.500) $14.900,000) (1.000.000) (6.000.000) (10.870.000 5.050.000 $(27.820.000