Question

Two independent situations.

Situation 1

Tamarisk Cosmetics acquired 10% of the 184000 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 $69400 cash dividend to all stockholders. On December 31, Martinez reported net incomr of $113000 for the year. At Decemeber, the market pricr of Martinez Fashion was $14 per share.

Situation 2

Vaughn Inc. obtained significant influence over Seles Corporation by buying 30% of Seles's 31,400 outstanding shares pf common stock at a total cost of $9 per share on January 1, 2016. On June 15, Seles declared and paid cash dividends of $39100. On Decemeber 31, Seles reported a net income of $85000 for the year.

Prepare all necessary journal entries in 2017 for both situations.

Answer 1

Situation -1

Date	General Journal	Debit	Credit
Mar-18	Available for sale Securities	2,392,000.00
	Cash		2,392,000.00
Jun-30	Cash	69,400.00
	Dividend Revenue		69,400.00
Dec-31	Securities Fair Value Adjustment	184,000.00
	Unrealized Holding Gain or Loss - Equity		184,000.00

Situation -2

Date	General Journal	Debit	Credit
Jan-01	Investment in Seles Corp Stock	84,780.00
	Cash		84,780.00
Jun-15	Cash	11,730.00
	Investment in Seles Corp Stock		11,730.00
Dec-31	Investment in Seles Corp Stock	25,500.00
	Revenue		25,500.00