Exercise 17-12 The following are two independent situations. Situation 1 Conchit
ID: 2475527 • Letter: E
Question
Exercise 17-12
The following are two independent situations.
Situation 1
Conchita Cosmetics acquired 10% of the 217,300 shares of common stock of Martinez Fashion at a total cost of $15 per share on March 18, 2014. On June 30, Martinez declared and paid a $79,100 cash dividend. On December 31, Martinez reported net income of $127,900 for the year. At December 31, the market price of Martinez Fashion was $16 per share. The securities are classified as available-for-sale.
Situation 2
Monica, Inc. obtained significant influence over Seles Corporation by buying 33% of Seles’s 34,700 outstanding shares of common stock at a total cost of $11 per share on January 1, 2014. On June 15, Seles declared and paid a cash dividend of $44,400. On December 31, Seles reported a net income of $89,700 for the year.
Prepare all necessary journal entries in 2014 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
Conchita Cosmetics
March 18, 2014
June 30, 2014
Dec. 31, 2014
Monica, Inc
Jan. 1, 2014
June 15, 2014
Dec. 31, 2014
Date
Account Titles and Explanation
Debit
Credit
Conchita Cosmetics
March 18, 2014
June 30, 2014
Dec. 31, 2014
Monica, Inc
Jan. 1, 2014
June 15, 2014
Dec. 31, 2014
Explanation / Answer
Journal entries:
To cash
(217,300@10% *15)
To Dividend revenue
( 79,100 @10%)
To Unrealised gain
($16- $15) 21,730
B)
To Cash
(34,700 @33% * 11)
To Investment in Seles
( 44,400@33%)
Date Description Debit Credit March 18,2014 Availability for sale $325,950To cash
(217,300@10% *15)
$325,950 June 30 ,2014 Cash $7910To Dividend revenue
( 79,100 @10%)
$7910 Dec 31,2014 Market adjustment $21,730To Unrealised gain
($16- $15) 21,730
$21,730Related Questions
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