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Two independent situations. Situation 1 Tamarisk Cosmetics acquired 10% of the 184000 shares of common stock...

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.

Solutions

Expert Solution

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

ekkarill92 answered 1 year ago
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