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 $ 1,700,000 Fair value $ 2,550,000

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

Equipment (five-year remaining life) Book value $3,700,000 Fair 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 Corp.
Revenues	($298,000,000)	($103,750,000)
Expenses	271,000,000	95,800,000
Equity in income of Sanchez	(4,361,500)	0
Net income	($31,361,500)	($7,950,000)
Retained earnings, January 1, 2020	($2,500,000)	($100,000)
Net income (above)	($31,361,500)	($7,950,000)
Dividends paid	5,000,000	3,000,000
Retained earnings, December 31, 2020	($28,861,500)	($5,050,000)
Current 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	$53,861,500	$27,820,000
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	(53,861,500)	(27,820,000)

Required:

Prepare consolidation journal entries for this business combination.