Summary balance sheet and income information for Pim Company for two years is as follows (in thousands):

On January 2, 2011, Pim Corporation purchases 10 percent of Fed Company for $25,000 cash, and it accounts for its investment (classified as an available-for-sale security) in Fed using the fair value method. On December 31, 2011, the fair value of all of Fed's stock is $500,000. On January 2, 2012, Pim purchases an additional 10 percent interest in Fed stock for $50,000 and adopts the equity method to account for the investment. The fair values of Fed's assets and liabilities were equal to book values as of the time of both stock purchases.REQUIRED1. Prepare a journal entry to adjust the Investment in Fed account to an equity basis on January 2, 2012.2. Determine Pim's income from Fed for2012.

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January 1, 2011 December 31, 2011 December 31. 2012 $ 60 240 $ 75 250 Current assets Plant assets $ 50 200 $325 $50 150 $125 $325 $250 $300 $ 50 150 100 Liabilities Capital stock Retained earnings 150 60 $300 $250 2012 $ 50 25 2011 $100 60 Net income Dividends