The following information is provided for Frank Co. and Mitch Co. on July 1, 2015.

FRANK CO.

MITCH CO. FV 6/30/15

MITCH CO.

Current Assets 2,000,000 8,000,000 9,000,000

Fixed Assets 28,000,000 5,000,000 9,000,000

Intangible Assets 15,000,000 3,000,000 10,000,000

Total Assets $ 45,000,000 $ 16,000,000

Current Liabilities 1,000,000 2,000,000 2,000,000

Notes Payable 8,000,000 5,000,000 4,000,000

Total Liabilites $ 9,000,000 $ 7,000,000

Common Stock 7,000,000 2,000,000

PIC 5,000,000 2,000,000

Retained Earnings - 6/30 24,000,000 5,000,000

Total Equity $ 36,000,000 $ 9,000,000

Total Liabilities and Equity 45,000,000 16,000,000

Revenue 70,000,000 8,000,000

Expenses 48,000,000 9,000,000

Net Income 22,000,000 (1,000,000)

Retained Earnings 7/1 9,000,000 6,000,000

Net Income 22,000,000 (1,000,000)

Dividends 7,000,000 0

Retained Earnings 6/30 24,000,000 5,000,000

On July 1, 2015, the following information was also available:

Frank Co. acquired 75% of the assets and liabilities of Mitch Co. for $22,000,000

The fair value of the 25% non-controlling interest was $6,000,000.

James Co, assisted in the purchase - charging a fee of $500,000.

In process research and development was appraised at $1,500,000.

Customer lists were appraised at $400,000.

The current assets, fixed assets, intangible assets, notes payable, and customer lists have a 15 year remaining life.

The research and development has an indefinite life span.

Any additional excess over book value is considered to be Goodwill.

Frank Co. uses the equity method to account for investments.

Both companies use the straight line method of amortization and depreciation.

The following end of year (6/30/2016) information is provided:

FRANK CO. MITCH CO.

Current Assets 1,000,000 5,000,000

Investment in Mitch Co. 19,040,625

Fixed Assets 25,553,000 7,500,000

Intangible Assets 32,000,000 2,500,000

Goodwill

Total Assets 77,593,625 15,000,000

Current Liabilities 8,000,000 4,000,000

Notes Payable 16,000,000 5,000,000

Total Liabilities 24,000,000 9,000,000

Common Stock 7,000,000 2,000,000

PIC 5,000,000 2,000,000

Retained Earnings 3/31 41,593,625 2,000,000

Total Equity 53,593,625 2,000,000

Total Liabilities and Equity 77, 593,625 15,000,000

Revenue 90,000,000 10,000,000

Equity in Subsidiary Earnings (2,884,375)

Expenses 67,800,000 12,900,000

Depreciation/Amortization

Net Income 19,315 625 (2,900,000)

Retained Earnings - 7/1 24,000,000 5,000,000

Net Income 19,315,625 (2,900,000)

Dividends 1,722,000 100,000

Retained Earnings - 6/30 41,593,625 2,000,000

On June 30, 2016, the following information was also available:

During the fiscal year ending June 30, 2016, Mitch sold $500,000 (cost of $150,000) of merchandise to Frank Co. 15% of the merchandise remains in Frank Co.s inventory at 6/30/2016. This merchandise was sold in September 2016.

On December 10, 2015, Frank sold land to Mitch for $230,000. The cost of the land was $20,000.

On 5/1/2016, Frank sold a building to Mitch for $3,300,000. The building had a book value of $1,200,000, a 12 year remaining life and no salvage value.

Provide the following:

The journal entry or entries to record the purchase on July 1 assuming use of the equity method.

The equity method journal entries during the fiscal year ending June 30, 2016.

The consolidation journal entries at June 30, 2016.

Consolidated balances in the balance sheet and income statement accounts.