On January 1, 2020, Franklin Corp. acquired a 55% interest in Sanchez Corp. Franklin paid for the transaction with $3 million cash and 500,000 shares of Franklin common stock (par value $1.00 per share). At the time of the acquisition, Sanchez's book value was $16,970,000. On January 1, Franklin stock had a market value of $14.90 per share and there was no control premium in this transaction. Any consideration transferred over book value is assigned to goodwill.

Sanchez had the following balances on January 1, 2020.

Land:Book value $ 1,700,000Fair value $ 2,550,000

Buildings (seven-year remaining life) Book value $2,700,000Fair value $3,400,000

Equipment (five-year remaining life) Book value$3,700,000Fair value$3,300,000

For internal reporting purposes, Franklin employed the equity method to account for this investment.

.The following account balances are for the year ending December 31, 2020 for both companies. Franklin Corp. Sanchez Corg. Revenues ($293,000,000) ($103,750,000) Expenses 271,000,000 95,800,000 Equity in income of Sanchez {4,361,500} 9 Net income {mm mm Retained earnings, January 1, 2020 {$2,500,000} {$100,000} Net income (above) {$31,351,500} {$7,950,000} Dividends paid 5,000,000 3,000,000 Retained earnings, December 31, 2020 {gm m Currem assets $30,500,000 $20,800,000 Investment in Sanchez 13,161,500 0 Land 1,500,000 1,700,000 Buildings 5,600,000 2,360,000 Equipment (net) 3,100,000 2,960,000 Total assets mm m Accounts payable ($3,100,000) {$4,900,000} Notes payable 0 {1,000,000} Common stock {2,900,000} {6,000,000} Additional paid-in capital {19,000,000} {10,870,000} Retained earnings, December 31, 2020 (above) {28,861,500} {5,050,000} Total liabilities and stockholders' equity M m Required: Prepare consolidation entries for this business combination. For all consolidation entries, label them as S, A, I, D, or E. Do not prepare the worksheet. Assume goodwill has been reviewed and there is no goodwill impairment