Question

Question 1 0.72/2 View Policies Show Attempt History Current Attempt in Progress These are two independent situations: 1. Sunland Cosmetics acquired 12% of the 287,500 shares of common stock of Elite Fashion at a total cost of $14 per share on March 18, 2020. On June 30, Elite declared and paid a $80,200 dividend. On December 31, Elite reported net income of $228,100 for the year. At December 31, the market price of Elite Fashion was $16 per share. 2. Culver Inc. obtained significant influence over Kasey Corporation by buying 25% of Kasey's 29,100 outstanding shares of common stock at a total cost of $11 per share on January 1, 2020. On June 15, Kasey declared and paid a cash dividend of $38.500. On December 31, Kasey reported a net income of $122.900 for the year. - Your answer is partially correct. Prepare all the necessary journal entries for 2020 for Sunland Cosmetics. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Credit Date Mar. 18 Account Titles and Explanation Unrealized Loss on Available-for-Sale Securities Debit 402500 Cash 402500 June 30 Cash 9624 Dividend Revenue 9624 Dec 31 1 Fair Value Adjustment 575000 Unrealized Gain or Loss-Income 575000 eTextbook and Media List of Accounts

Answer 1

Answer to Part a. Credit Date Mar 18 Debit 4,025,000 4,025,000 June 30 9,624 Account Titles and Explanation Available for Sale Securities (287,500 * $14) Cash Cash ($80,200 * 12%) Dividend Revenue Securities Fair Value Adjustments Unrealised Gain or Loss -Income [287,500 * ($16 - $14)] 9,624 Dec 31 575,000 575,000 Answer to Part b. Credit Date Jan 1 Debit 80,025 80,025 June 15 Account Titles and Explanation Investment in Culver Stocks (29,100 * 25% * $11) Cash Cash ($38,500 * 25%) Investment in Culver Stocks Investment in Culver Stocks ($122,900 * 25%) Revenue 9,625 9.625 Dec 31 30,725 30,725