Question

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 Seles Corporation by buying 30% of Seles’s 27,300 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 $39,100. On December 31, Seles reported a net income of $92,200 for the year.

Prepare all necessary journal entries in 2017 for both situations. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Situation 1: Cheyenne Cosmetics
choose a transaction date Jan. 1, 2017Mar. 18, 2017June 15, 2017June 30, 2017Dec. 31, 2017	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date Jan. 1, 2017Mar. 18, 2017June 15, 2017June 30, 2017Dec. 31, 2017	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date Jan. 1, 2017Mar. 18, 2017June 15, 2017June 30, 2017Dec. 31, 2017	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
Situation 2: Ayayai, Inc
choose a transaction date Jan. 1, 2017Mar. 18, 2017June 15, 2017June 30, 2017Dec. 31, 2017	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date Jan. 1, 2017Mar. 18, 2017June 15, 2017June 30, 2017Dec. 31, 2017	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date Jan. 1, 2017Mar. 18, 2017June 15, 2017June 30, 2017Dec. 31, 2017	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount

Answer 1

SITUATION 1: JOURNAL ENTRIES

JUNE 30 Cash___________________________________________________7980

Dividend_______________________________________________________________7980

*(79800*10%)

(Recording dividend revenue declared by Martinez)

DECEMBER 31 Securities Adjustment______________________________________18500

Unrealized Holding Profit_________________________________________________18500*

*(18500 shares* ($13-$12))

(Recording Investments at Fair value)

SITUATION 2: JOURNAL ENTRIES

JANUARY 1 Seles Corporation Stock____________________________________73710

Cash_________________________________________________________________73710*

*((27300*30%)*$9)

(Purchase of 30% stock of Seles Corporation)

JUNE 15 Cash____________________________________________________11730

Seles corporation Stock_________________________________________________11730*

*(39100* 30%)

(Received Cash Dividends from Seles Corporation)

DECEMBER 31 Seles Corporation Stock____________________________________27660

Income from stock_____________________________________________________27660*

*(92200*30%)

(Income from stock of Seles Corporation)