Questions $14-15$

Wolf, Inc. purchases $100,000$ shares of Butch, Inc $($representing a $15\%$ ownership interest$)$ for $$20$ share on $\frac{1}{1}\frac{?}{2007}.$ Wolf classifies this investment as "Trading". At the end of $2007,$ shares of But Inc. were selling for $$12$ per share. Butch's $2007$ Net Income was $$2,500,000$ and Butch paid a $$1$ per share dividend in December of $2007.$ At the end of $2008,$ Butch Inc. shares were selling for $$1$ per share. Butch's $2008$ Net Income was $$4,750,000,$ and they paid a $$2\mathrm{.}50$ per share dividend in December of $2008.$ On $\frac{1}{1}\frac{?}{2009},$ Wolf purchases another $150,000$ shares of Butch for $$15$ per share, increasing their ownership interest to $25\%.$

What journal entries $($if any$)$ will be necessary by Wolf to change to the equity method on $\frac{1}{1}\frac{?}{2009}($going from minority passive investor to minority active investor$)?$

Assume that Wolf, Inc reported pre$-$tax Net Income of $$21,300,000$ in $2007.$ What would the report as adjusted $2007$ Pre$-$Tax income when they prepare their $2009$ financial statements? SEC requires companies to provide income statements for $2$ previous periods for comparability. purposes$).$