First we took some cereal boxes out of the trash and cut a ring. We used a few strips of paper mache across the ring and top of the balloon to attach the ring, the top of the balloon was sticking out (didn't think to take any pictures). More cereal box was cut to make the rest of the hat. More paper mache was added to attach it all together.
We cut some slits in the ring for the ears. This added stability to the ears.
We are now letting it dry again. The kids are having such a great time that they decided that they want to each do their own creation this summer. They plan on making it outside which would be a cleaner option!