The following are two independent situations.
Situation 1
Conchita Cosmetics acquired 10% of the 200,000 shares of common
stock of Martinez Fashion at a total cost of $13 per share on March
18, 2017. On June 30, Martinez declared and paid $75,000 cash
dividend to all stockholders. On December 31, Martinez reported net
income of $122,000 for the year. At December 31, the market price
of Martinez Fashion was $15 per share.
Situation 2
Monica, Inc. obtained significant influence over Seles Corporation
by buying 30% of Seles’s 30,000 outstanding shares of common stock
at a total cost of $9 per share on January 1, 2017. On June 15,
Seles declared and paid cash dividends of $36,000. On December 31,
Seles reported a net income of $85,000 for the year.
Prepare all necessary journal entries in 2017 for both
situations.
Situation-1 Journal Entries | |||
Date | Particulars | Debit | Credit |
18-03 | Investment in AFS (200000*10%*13) | $2,60,000.00 | |
cash | $2,60,000.00 | ||
TO Record investment made | |||
30-06 | Cash (75000*10%) | $7,500.00 | |
Dividend Revenue | $7,500.00 | ||
To Record Dividend Earned | |||
31-12 | Securities Fair value Adjustment | $40,000.00 | |
Unrealized Holding Gain ( 20000*2) | $40,000.00 | ||
To Record Investment at Fair Value |
Situation-2 Journal Entries | |||
Date | Particulars | Debit | Credit |
01/01 | Investment in S Corp (30000*30%*9) | $81,000.00 | |
cash | $81,000.00 | ||
TO Record investment made | |||
15/06 | Cash (36000*30%) | $10,800.00 | |
Investment in S Corp | $10,800.00 | ||
To Record Dividend Earned | |||
31/12 | Investment in S Corp (85000*30%) | $25,500.00 | |
Revenue from Investment | $25,500.00 | ||
To Record Income earned |
The following are two independent situations. Situation 1 Conchita Cosmetics acquired 10% of the 200,000 shares...
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The following are two independent situations.
Situation 1
Carla Cosmetics acquired 10% of the 210,000 shares of common stock
of Martinez Fashion at a total cost of $13 per share on March 18,
2020. On June 30, Martinez declared and paid $75,800 cash dividend
to all stockholders. On December 31, Martinez reported net income
of $129,200 for the year. At December 31, the market price of
Martinez Fashion was $14 per share.
Situation 2
Sarasota, Inc. obtained significant influence over...
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The following are two independent situations.
Situation 1
Cheyenne Cosmetics acquired 10% of the 185,000 shares of common
stock of Martinez Fashion at a total cost of $12 per share on March
18, 2017. On June 30, Martinez declared and paid $79,800 cash
dividend to all stockholders. On December 31, Martinez reported net
income of $115,000 for the year. At December 31, the market price
of Martinez Fashion was $13 per share.
Situation 2
Ayayai, Inc. obtained significant influence over...